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A n n u a l r e v i e w 2 0 0 7

years ofdiamond

production

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Namdeb Annual Review 2007 1

This Annual Review covers the period

1 January 2007 to 31 December 2007, and includes inormation on Namdebs operations, its

subsidiaries and the contributions made to production by contractors. A separate, more detailed

report, to stakeholders, that will highlight our contribution to sustainable development, will be

presented later in the year. For more inormation on this or any other documentation on the company,

please visit www.namdeb.com or contact External Aairs and Corporate Communications.

Contents

Our visionNamdeb the worlds leading alluvial-diamond

mining company.

Our missionWe produce diamonds proftably, sustainably and

responsibly to the beneft o our shareholders and

stakeholders, whilst making a lasting contribution

to Namibia.

Our values

www.namdeb.com

Vision, mission and values 1

100 years o history 2

How diamonds beneft Namibia 4

Organisational profle 6

Chairmans statement 8

Financial perormance 10

Namdeb's year in review 14

Managing directors review 16

Economic perormance 22

Building a sustainable Oranjemund 26

Preerential procurement 28

Social perormance 30

Environmental perormance 36

Associate companies 42

Corporate governance 50

Board o directors 52

Alternate directors 53

G;ossary 54

Statutory inormation 55

Contact details 55

years ofdiamond

production

EXcellence

The quality o

being very good at

something

Care

To do something

fairly and with

great attention

Integrity

The quality o

being honest and

frm in your moral

principles

TEamwork

The ability to work

well together

Diversity

Recognising

the value o

including all

EXcellence Care Integrity TEamwork Diversity = EXCITED

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Namdeb Annual Review 20072 Namdeb Annual Review 2007 3

A shiny treasure starts a diamond rushDiamonds originated deep in the interior o southern Arica. Over millennia, the Orange River carried

them to the Atlantic Ocean where they were deposited on ancient beaches, which in ti me became part

o the mainland.

Prior to the discovery o diamonds in the

Namibian desert, some prospecting had

taken place along the coast as early as

1863. David Christiaan, a Hottentot Chie,

gave a Cape Town frm (De Pass, Spenceand Company) a concession extending rom

Angra Paquena (Lderitz) to the Orange River

and 32 kilometres inland rom the coast.

In 1908, railway worker Zacharia Lewala

stumbled on a shiny treasure that started a major

diamond rush. As a result, diamond mining

regulations were introduced in 1911 and the

Sperrgebiet or orbidden territory was declared.

The harvestingo diamonds inNamibia takesshapeIn 1920, Sir E rnest Oppenheimer

ormed Consolidated Diamond

Mines o South West Arica (CDM);

in 1923, CDM concluded the

Halbscheid Agreement with the

South West Arican Administration,

which granted CDM the mining rights

or the Sperrgebiet. Oranjemund, a

unique town that owes its existence

to diamond mining, was established

in 1936. It adopted its name rom

its geographical position at the

mouth o the Orange River, the

national boundary between the

Republics o Namibia and South

Arica, and services the Mining

Area 1 and Orange River mines.

The birth oNamdebIn 1994, an agreement between De Beers and the Government o the Republic o Namibia resulted in the

ormation o Namdeb Diamond Corporation (Pty) Limited. All o the De Beers groups existing Namibian

mining licences and related rights were replaced by a consolidated and rationalised mineral agreement,

drawn up under Namibias post-independence mineral legislation. The ormal signing ceremony, attended

by Namibias Founding President Sam Nujoma and the then chairman o De Beers Centenary Julian

Ogilvie-Thompson, took place at State House in Windhoek. The key wishes expressed on that historic day

were that Namdeb:

would grow to become an important global player in the diamond industry; and

wouldcontinuetobetheleadingnationalproviderofgovernmentrevenue,foreignexchangeearnerand

employer, while setting benchmarks in respect o excellence in people.

In this photograph rom the early 1950s,workers

remove diamond-bearing gravel rom the bedrock at

Consolidated Diamond Mines o South West Arica.

years ofhistory

Sperrgebiet shipwreck is the fnd o thecentury or NamibiaWhile the Namibian nation was marking the centenary since the discovery o

diamonds, another ascinating discovery unolded in April in the orm o the oldest

sub-saharan shipwreck yet in Namdebs mining area. The fnd yielded a wealth o

objects including six bronze canons, several tons o copper, over 500 elephant tusks,

navigational instruments, weapons and thousands o Spanish and Portuguese gold

coins, minted in the late 1400s and early 1500s. For Namibia, it is the archaeological

fnd o the century and a ftting way to celebrate the 100th year o diamond mining in

the Sperrgebiet, where the shipwreck was ound.

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How diamondsbeneft Namibia

They build the economy

Economic muscleNamdebs contribution to the economy through revenues generated and partnerships orged has

meant that we are the countrys largest fnancial contributor. Diamonds are an important generator o

export earnings, accounting or more than 40% o export revenue, 7% o government revenue and

more than 10% o gross domestic product (GDP).

Namdeb, De Beers Marine Namibia, NamGem and the Namibia Diamond Trading Company (NDTC)

employ over 3 000 people, most o whom are Namibian citizens. This makes the Namibian De Beers

amily o companies one o the countrys largest employers, and creates multiple opportunities or

partners not only i n mining, but also i n technology, enterprise development and academic research.

Furthermore, or every 10 people employed at Namdeb, an additional fve people are employed

throughout the economy.

Through successul partnerships, and a deep commitment to the Namibian people, Namdeb believes

its sustainable diamond mining enterprise has made tangible dierences to the Namibian nation.

Personal strengthAs one o the countrys largest

employers, Namdeb provides

exciting learning opportunities or

bursary students and employees,

both within and outside Namibias

borders. Namdeb views educationas critical to the growth o a thriving

economy and has made signifcant

investments in all levels o education

and training to help ensure a brighter

uture or the country and its people.

They create prosperity

Intellectual capitalAs the worlds leading alluvial-diamond miningcompany, Namdeb has a wealth o expertiseacquired over many years o diamond mining andaims to create successul and sustainable miningactivity wherever it operates.

The lie o Namibias onshore operations has been extended through signifcanttechnological and human investment. Namdeb continues to strive to extend thelie o all its mining operations in Namibia whether through exploring or newdeposits or investing in people and technology to optimise existing resources.

De Beers partnership with the Namibian Government has ensured that Namdebhas access to knowledge and expertise in all aspects o diamond mining throughthe diamond pipeline. The NDTC helps to ensure continued demand or Namibias most valuable resource.

IntegrityAs a key participant in the Kimberley Process, Namibia sets benchmarks in the legislative and regulatory processes andmanagement o diamond resources. Combined with good government practice, this ensures that revenue rom Namibiasdiamonds is ploughed back into the economy or the beneft o all i ts people.

InfrastructureDiamonds are Namibias single biggest export product and the backbone o the economy, acting as a catalyst or the provisionand extension o inrastructure such as roads, hospitals, houses and schools. Indeed, Namibia spends almost hal o its revenueon public services, working actively to alleviate poverty, fght disease and advance development.

They make a dierence in peoples lives

Through its commitment to working together with both government and the

people o Namibia, Namdeb has successully ensured that the countrys most

inaccessible diamond resources are turned into wealth that touches the lives o

all Namibians.

Supporting peopleNamdeb has successully helped to develop Namibian society through its

substantial investment in social, educational and environmental projects.

Millions o Namibian dollars have already been spent on projects o all sizes

rom large-scale initiatives to small-business ideas. Namdeb remains thelargest corporate responsibility contributor to the socio-economic development o the country.

Protecting peopleNamdeb was the frst company in Namibia to provide anti-retroviral treatment (ART) or permanent

employees and their spouses/lie partners, and is globally recognised as a leader in combating

HIV/Aids in the workplace.

Protecting livesPeople working at Namdeb operations enjoy among the highest levels o saety and

environmental standards in the world. Almost all o Namdebs operations have achieved the

highest NOSA ratings as well as ISO 14001 certifcation.

Conserving the environmentNamdeb continues to be involved i n numerous conservation, monitoring and ecological history

programmes which aim to minimise the potential impact o its operations on the environment.

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Namdeb Annual Review 20076

Republic ofSouth Africa

Republic ofNamibiaNamdeb Diamond Corporation (Pty) Limited

Founded 1994

Owned Equally by the Namibian Government and De Beers Socit Anonyme

Employees More than 3 000

Head ofce Windhoek

Core business Diamond mining in Namibia and related activities such as sorting, cutting and polishing.

All the diamonds mined at Namdebs operations are sold to the NDTC or resale on the

international diamond market.

The town o Oranjemund serves the Mining Area 1 and Orange River Mines operations. It is also the logistics base

or the De Beers Marine Namibia crew-change operation and home to most Namdeb employees. The Namdeb

ofce in the town o Lderitz provides services to Elizabeth Bay (E/Bay) Mine, the main operation o Northern

Areas mines.

Organisationalprofle

Other servicesA ully unctional hospital and primary school are maintained by the company. The town o Oranjemund is maintained

and prepared or the uture positive legacy by the Oranjemund Town Management Company, a wholly owned

subsidiary o Namdeb, while diamond cutting and polishing is done by NamGem, another wholly owned subsidiary

based in Okahandja. The companys social responsibility programme is managed by the Namdeb Social Fund (NSF)

while Oshipe Development Fund, a wholly owned subsidiary o Namdeb, aims to promote entrepreneurship and

small business development through investment in commercially viable business in the country.

Mining Area 1, Bogenfels andElizabeth Bay licencesExtends rom the Orange River in the south to

Lderitz in the north, and rom a ew kilometres

oshore in the Atlantic Ocean to around 20 to 35

kilometres inland.

Douglas Bay Mining LicenceExtends north o Lderitz or some 60 kilometres

and approximately 15 kilometres inland o the

Atlantic high-water mark.

The company holds six mining licences in the following areas:

The Orange River Mining LicenceExtends along the Orange River or about 50

kilometres inland rom the Mining Area 1 boundary.

Atlantic 1 Mining LicenceEncompasses a portion o the middle shel o the

Atlantic Ocean, rom the boundary o Mining Area 1

to about 65 kilometres rom the shore.

Orange River Mining Licence

Mining Area 1 Mining Licence

Atlantic 1 Mining Licence

Bogenfels Mining Licence

Elizabeth Bay Mining Licence

Douglas Bay Mining Licence

Mining Licence 128A, 128B, 128C

Exclusive Prospecting Licences (EPL)

(3605, 3606, 3607, 3608, 3609, 36010

and 36011) Caprivi Region

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Queen Elizabeth II, at one o her recent birthdaycelebrations, commented that everyone can get old you just have to live long enough. This commentholds so much truth in every aspect o lie, including

diamond mining. O course, its not the years alonewhich matters, but what one has achieved with them.

As diamond mining in Namibia enters its 100thyear, we look back with immense pride at a longand colourul diamond mining journey o success,achievement, partnership and living long enough tobe successully a century old.

In what is perhaps a timeous reminder o theimpressive age we have attained, 2007 has proven tobe one o the more difcult years in the recent historyo land mining. The land operations recovered 60 000carats less than its budget o 1,1 million carats andexceeded its cost budget. Some o the reasons or theunder-perormance o our Namdeb land operationswere:

AreattheNo.3PlantMainControlCentre;

Lowerthanexpectedproductivity,especiallyinthe

mining production areas; Increaseincosts,especiallyfuel;

Adverseweatherconditions,therebyincreasing

the cost o maintaining the sea wall; and Incidentsofoodingofthemini-mine.

While these reasons provide a sound technical

explanation or our under-perormance, the moresalient explanation lies in the reality that land-basedmining is now in its 100th year and has reacheda point which will require extra-ordinary techniquesand skills to continue to make it a success. Moreimportantly, land-based mining will require realisticand sustainable targets or us to continue to enjoy theruits o diamond mining.

However, management has prepared well or t hesechallenges, and has had the vision to invest or theuture. As a result, in spite o the set-backs on theland operations, Namdebs total diamond productioncontinued to exceed 2 million carats with landaccounting or 1,04 million carats and marine or1,x 14 million carats.

Chairmansstatement

This is indeed an impressive achievement and cleartestimony that De Beers Marine Namibia has grown inleaps and bounds to take over the leadership mantlerom Namdeb land a role it will increasingly play in

uture.

Our saety perormance or 2007 was much improvedcompared to 2006. We closed the year with a LTIFRo 0,17 and reduced injuries and vehicle accidents bymore than 40% in comparison to the previous year.We reached the 6 Million Fatality-Free Shit mark inNovember, retained NOSCAR status, retained our ISO14001 certifcation and also obtained OHSAS 18001certifcation.

Another important milestone was attaining frst andsecond position in the prestigious NOSA International

Top 100 Mines Competition.

Being uncompromising on saety in the workplacemust become a standard o perection that we allstrive or. Any incident or injury on duty is simply onetoo many.

In terms o the environment, we continued to makegreat progress on our rehabilitation plan and enjoyingtremendous support rom our stakeholders.

As we set orth into 2008 we must remind ourselveso our motto: On diamonds we build. Our mottoprovides us with the very i mportant reminder that

beyond our commercial objectives, Namdeb carriesa national duty. This duty is best encapsulated byNamibias Vision 2030 which sets very bold targetsor Namibians to enjoy standards o living equal totheir counterparts in Europe by 2030. As one othe countrys biggest contributors to the Namibiantreasury, Namibians look to Namdeb to play a leadingrole in the national development o the country.

In spite o our challenges with land mining, Namdebhas no intention o relinquishing its prominent positionin Namibia that o being one o the most importantplayers in the economy. To do so, we must reassessour operations and take courageous decisions toensure that Namdeb is correctly resourced to addressthe challenges o mining proftably and sustainably.

Building for the future by learning from experience

Throughout the journey o mining or a century wehave had to adopt and employ new methods to minesuccessully and sustainably. At this point in the historyo Namdeb, greater impetus is required to accelerate

tforpurpose,exibleandnon-traditionalworkingand employment practices to ensure that Namdebcontinues to be the world's leading alluvial diamondmining company.

The electricity challenge currently being experiencedacross southern Arica and the ever-increasing uelprice will certainly have an adverse eect on ouroperations as we move to close Chapter II (deliveringcumulatively 10 million carats by 2010).

While we did not achieve all our production andfnancial targets over the last year, we are ortunateto have two strong shareholders in De Beers andthe Government o the Republic o Namibia. Thestrength o this partnership is the reason why we canlook back to 2007 and see it as a year o learningand experiences that can only make us better andstronger.

We will take the lessons o 2007 as an inspirationto deliver bigger and better results or all ourstakeholders and shareholders in 2008 and beyond.

Nicky Oppenheimer

Chairman

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Production statistics 2007 2006

000s 000s

Carats produced 2 176 2 085

Carats sold 2 060 2 174

land 1 030 1 120

marine 1 030 1 054

Tons stripped/treated land 56 165 58 532

Square metres mined marine 5 312 5 327

Highlights

Production exceeded two million carats or the second year in a row a 4%improvement on 2006. However, as a result o production schedules, carat

sales were 5% below those o 2006.

Diamond sales revenue at N$4,56 billion is 15% lower than in 2006 as a result

o the reduction in carats sold and a change in mix, combined with the eect

o the price correction in the rough diamond market in the second hal o 2006.

Rough diamond prices have been strengthening during 2007.

Proft beore tax decreased to N$776 million (2006: N$1,294 million), mainly

due to the reduction in revenue combined with increased production costs,

partially oset by a decrease in other operating expenses.

Taxes amounted to N$633 million (2006: N$989 million ), representing 82% o

pre-tax profts (2006: 76%).

Production costs came under pressure during 2007 due to higher than

anticipated uel prices and salary increases granted, as well as additional

maintenance work required on the sea wall due to adverse weather conditions.

Other operating expenses decreased due to the arrangements o the new sales

agreement coming in to eect in 2007 which led to the establishment o NDTC

a 50:50 joint venture marketing company responsible or valuing, sorting, selling

and marketing o Namdebs production.

Financialperormance

Employee compensation

Dividends paid to shareholders

Direct and indirect taxes

Retention to support future business growth

2006

29%

13%48%

10%

2007

39%

5%

38%

18%

Value-added distribution

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Financialperormance

Balance sheetAs at 31 December 2007 2007 2006

N$ millions N$ millionsASSETS

Non-current assets

Property, plant and equipment,

mining rights and investments 1 206 1 169

1 206 1 169

Current assets

Diamond and stores inventories 419 214

Trade and other receivables 355 322

Cash and cash equivalents - 336

774 872

Total assets 1 980 2 041

EQUITY AND LIABILITIES

Capital and reserves

Share capital and non-distributable reserves 125 112

Distributable reserves 260 202

385 314

Non-current liabilities

Deerred taxation 226 179

Provisions or liabilities and charges 470 428

696 607

Current liabilities

Trade and other payables 547 532

Shareholders or dividends 12 165

Net bank overdrat 340 -

Taxation liability - 423

899 1 120

Total equity and liabilities 1 980 2 041

Cash ow summaryFor the year ended 31 December 2007 2007 2006

N$ millions N$ millions

Cash generated rom operations 829 1 805

Taxation paid (1 049) (615)

Net cash rom operating activities (220) 1 190

Net cash used in investing activities (204) (439)

Net cash used in fnancing activities (252) (148)

Net (decrease) / increase in cash and cash equivalents (676) 603

Cash and cash equivalents at beginning o the year 336 (267)

Cash and cash equivalents at end o the year (340) 336

Income statementFor the year ended 31 December 2007 2007 2006

N$ millions N$ millions

Diamond sales 4 562 5 366

Cost o sales 3 503 3 590

Other operating expenses 283 482

Proft beore tax 776 1 294

Taxation 633 989

Net proft or the year 143 305

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July 2007Oranjemund Town Management Company,a wholly-owned Namdeb subsidiary taskedwith preparing the town o Oranjemund orproclamation and a prosperous uture beyondthe mining era, is ofcially launched.

August 2007Namdeb breaks a record at the NOSA Top 100international mining companies awards ceremonyby receiving three top saety awards the frst timeever in the history o NOSA that a mining companyhas won more than one o the top three awards.

Namdeb and the Mineworkers Union o Namibia(MUN) successully concluded wage negotiations ona 10% increase across the board or the companysunion members (who make up 70% o sta).

September 2007Namdeb operations hosted ormer President SamNujoma. The visit to the Sperrgebiet and Atlantic 1was hosted by the Geological Department inconjunction with De Beers Marine Namibia.

December 2007Chairman o De Beers, Nicky Oppenheimer,ofcially launched the De Beers Namibia Fund.

The und is the ofcial vehicle through which

De Beers will support corporate socialinvestment initiatives in Namibia.

October 2007National Diamond Trading Company andDe Beers Group announce theoutcome o the frst application processor the supply o rough diamondsto 11 sightholders in Namibia.

February 2007Namdeb Social Fund donates over N$3 millionto 42 projects and organizations countrywideranging rom education, health and welare,community development and SME projects.

April 2007On the occasion o its ull results or the periodending December 2006, Namdeb announces a27% increase in its carat production, attributedto an increase in land-based production at themines No 3 Plant, Pocket Beaches as well as

increased marine production.

Namdeb operations, through the Sida Ei !gsTask Group, hosts an inter-ministerial delegationto brie them on the utu re o land-basedoperations and developments.

May 2007One o Aricas greatest present

day explorers, Kingsley Holgateand his expedition team visitedOranjemund on their Cape to Capeexpedition The Outside Edge acircumnavigation o Arica by landthrough 33 countries.

June 2007As part o a benchmarking exercise,Zimbabwean Minister o Mines andMining Development Charles Tahwa,accompanied by his Namibian counterpartErkki Nghimtina and other high rankingofcials, visited Namdeb operations.

January 2007The Government o the Republic o Namibia andDe Beers reached an agreement that will securethe sales o Nambias diamonds through theNamibia Diamond Trading Company until 2013.

For the frst time, this unique agreement will extendrom diamond mining into diamond marketing throughthe establishment o a 50:50 partnership in a newcompany Namibia Diamond Trading Company charged with the responsibility o valuing, sorting, sellingand marketing o Namdebs diamond production.

March 2007As part o Namdeb and its group o companies'social responsibility programme, NamGemDiamond Manuacturing Company handed overa newly renovated armhouse (at a cost oN$350 000) to the Ileni Twikwaeni Project, acommunity initiative o the Five Rand Camp on theoutskirts o Okahandja. The acility hosts, amongothers, community based activities, HIV/Aidscounselling and home-based care activities, aswell as a number o income generating projects.

Namdebs yearin review

November 2007Namdeb achieves six million atality-

ree shits a record to be proud o andcelebrate while realizing that it is vital thatthe company remains a leader in saety.

Namdeb hosts the annual West CoastMetallurgical conerence, with the ocuson metallurgical processes across theprincipal areas o ore preparation, orconcentration, recovery processes,design, commissioning, technology andproject overviews rom business units.

EXcellence Care Integrity TEamwork Diversity

Productionstatistics 2007 2006

0 0 0 s 0 0 0 s

Carats produced 2,176 2,085

Carats sold 2,060 2,174

s L AN D

s MA RI NE

4ONSSTR IPPEDTREATEDnLAND

3QUAREMETRESMINEDnMAR INE

Income statement2007 2006

$ I AM O ND S A LE S # OS T OF S AL ES

' RO SS P RO lT

0 R OS P EC T IN G A N D 2 $ / T H E R OP E R AT I N G EX P E N S ES

Profit before tax 776 1,2944AXATION

Net profit forthe year 143 305

Balance sheet

!SAT$ECEMBER 2007 2006

ASSETS

Non-current assetss0ROPERTYPLANTANDEQUIPMENT MININGR IGHTSANDINVESTMENTS

1,206 1,169

Current assetss $IAMONDAND S T O R ES I N VE N TO R IE S s4RADEANDOTHERRECEIV A BL E S s # A S H A N D C AS H E Q U IV A L E NT S

774 872

Total assets 1,980 2,041

EQUITY ANDLIABILITIES

Capital and reservess3HARECAPITA LAND N O N D I S T R IB U T A BL E R ES E R V ES s $ ISTR IB U T A BL E R ES E R V ES

Non-current liabilitiess $ E FE R RE D TA X AT I ON s0ROVISIONSFOR LIABILI TIES A N DC HA RG ES

696 607

Current liabilitiess 4 R A D E A N D O T HE R P A YA B L E S s 3 H A R E HO L D ER S F O R D I VI D E ND S s . E T BA N K O VE R DR A FT s 4 A XA T IO N LI A BI L IT Y

899 1,120

Total equity and liabilities 1,980 2,041

Cashflow summary 2007 2006# A S H G EN E R AT E D F R OM O P ER A T I ON S 4AXATIO N PA ID

. E T C A SH F R O M OP E R A TI N G AC T I V I TI E S

.ETCASHUSEDININVESTINGACTIVITIES

.ETCASHUSEDINlNANCINGACTIVITIES

.ETDECREASEINCREASEINC A S H AN D C A S H EQ U I V AL E N T S

#ASHANDCASHEQUIVALENTSA T B E G IN N I NG O F T H E Y E A R

Cashand cashequivalentsat end ofthe year (340) 336

Namdeb Financial Performancefor theyear ended 31December2007

Highlights

0RODUCTIONEXCEEDEDMILLIONCARATSFORTHESECONDYEAR INAROWAIMPROVEMENTONBUTASARESULTOFPRODUCTIONSCHEDULESCARATSALESWEREBELOWTHOSEOF

$IAMONDSALESREVENUEAT.BILLI ONISLOWERTHANINASARESULTOFTHEREDUCTIONI NCARATSSOLDACHANGEINMIXCOMBINEDWITHTHEEFFECTOFTHEPR ICECORRECTIONINTHEROUGHDIAMONDMARKETINTHESECONDHALFOF2OUGHDIAMONDPR ICESHAVEBEENSTRENGTHENINGDUR ING

0ROlTBEFORETAXDECREASEDTO.MILLION.MILLIONMAINLYDUETOTHEREDUCTIONINREVENUEINCREASEDPRODUCTIONCOSTSPARTIA LLYOFFSETBYDECREASESINPROSPECTINGCHARGESANDOTHEROPERATINGEXPENSES

4AXESAMOUNTEDTO.MI LLION.MILLIONREPRESENTINGOFPRETAXPROlTS

0RODUCTIONCOSTSCAMEUNDERPRESSUREDUR INGDUETOHIGHERTHANANTIC IPATEDFUELPR ICESANDSALARYINCREASESGRANTEDASWELLASADDITIONALMAINTENANCEWORKREQUIREDONTHESEAWALLDUETOADVERSEWEATHERCONDITIONS

%XPENDITUREONPROSPECTINGAND2$ARELOWERTHANINASTHE-AR INE$REDGINGPROJECTEXPENSESINCURREDINWERENOTREPEATEDIN

/THEROPERATINGEXPENSESWEREFAVOURABLYIMPACTEDBYTHEARRANGEMENTSOFTHENEWSALESAGREEMENTCOMINGINTOEFFECTINWHICHLEDTOTHEESTABLISHMENTOF.$4#nAJOINTVENTUREMARKETINGCOMPANYRESPONSIBLEFORVALUINGSORTINGSELLINGANDMARKETINGOF.AMDEBSPRODUCTION

Weare

EXCITED

OurValues

Valueaddeddistribution 2006

Valueaddeddistribution 2007

Formore information, contact:(ILIFA-BAKO'ROUP-ANAGER%XTERNAL!FFA IRSAND#ORPORATE#OMMUNICATIONS.AMDEB#ENTRETH&LOOR$R&RANS)NDONGO3TREET7INDHOEK4ELEPHONE & A C S IM I L E E M A IL H I L I F A M B A K O N A MD E B CO M7 E B S I TE W W W NA M D EB C O M

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The year 2007 was exciting or Namdeb, with thecompany recovering over two million carats or thesecond year in succession. Production rom marinemining yielded 1,18 million carats (up rom 1,05

million carats in 2006) and land operations produced999 000 carats (compared to 1,035 million caratsin 2006).

This achievement is particular ly pleasing as, onlya ew years ago, it was considered impossible oroutput to exceed the regular production levels o1,3 million carats per annum. However, with theapplication o innovative beach accretion strategies,Namdeb has been able to extend its land operationsin Mining Area 1 and boost production substantially.

Record production despite challengesThe record fgures o 2007 were achieved in spiteo production disruptions and adverse weather.Damage rom fre at Number 3 Treatment Plantrendered it inactive or fve months. There werealso added costs to transport ore to alternativetreatment acilities. Poor weather during thewinter months created harsh sea conditions,leading to additional maintenance costs or thesea-walls that protect the low-lying mini-mines.

Production rom the Elizabeth Bay Mine exceededbudget or the frst time since the commissioningo the new treatment plant in 2004. Similarly, thecombined contractor operations had a good ourth

quarter, making up or the production shortallsincurred during the third quarter. A total o 30 000carats was recovered rom the combined surzone, shallow marine and mid-water operations.

The larger-than-expected average stone sizerom this area contributed to a very good fnancialperormance. During the course o 2008, it isanticipated that the shallow marine sector willexpand, with the addition o three vessels.

Financial overviewNotwithstanding a good production, Namdeb didnot achieve budget, mainly as a result o a shortallin carats sold and an increase in unbudgetedexpenditure as discussed above and in otherrelevant sections o this report. The companysturnover was N$4,6 billion (15% lower than 2006)and the distributable amount was N$671 million.

Strategic reviewIn our previous years report (2006), we outlinedthe objectives or a comprehensive strategicreview or Namdeb land operations, which we

believe will deliver a turn-around strategy throughproject Sida Ei !gs. Indeed, as reported then,2007 was a year o designing and developingthis change management strategy. We are happyto report some positive achievements. The SidaEi !gs strategy is premised on three pillars:1. A business model to guide uture decisions

about the ull diamond pipeline romexploration through to closure o operations.

2. Achieving the ull potential o Namdeb's mineralresources. This will be done by improving currentoperations through asset sweat opportunitiesand cost optimisation, as well as the deliveryo new projects; these projects will generatenew carat opportunities to replace depletingresources, while exceeding Chapter 2 BigHairy Audacious Goal (BHAG) and increasingour lie o mine and production projections.

3. Creating a positive legacy through theimplementation o an integrated closure plan.

The strategy will be achieved through seven workstreams or strategic initiatives: Carats Today,Carats Tomorrow, Business Investment Model,

Overheads and Costs Optimisation, Positive Legacy,Organisational Eectiveness, Communicationand Change Management. Instead o rollingout these initiatives exclusively as a separateSida Ei !gs project, the workstreams will beimplemented as part o the ongoing operations.

With this re-organisation, the new CorporateStrategic Plan is now in an improved positionto guide management eorts to restructure theNamdeb land operations into a more ft-or-purpose business uwnit that will deliver resultswhile downscaling the operations. We havecommenced the implementation o this strategy andbelieve that Sida Ei !gs provides the appropriatechange ramework or Namdeb land operations.

Managingdirectors review

Strong production levels and bold newinitiatives mark Namdebs contributionto national development

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Managing the mining footprintNamdebs rehabilitation plan was fnalisedat the end o October 2007. Seven pilotprojects were devised to provide a more

accurate costing o the tasks o rehabilitation,so that these could be ed into the detailedcost estimate or the March 2008 boardmeeting. The frst o these pilot projectshas been completed and signed o; theproject was the rehabilitation o overburdendumps and mined areas at Aches and otherdisturbed areas along the Sendelingsdri toOranjemund road. The other pilot projects in Mining Area 1 and along the road romOranjemund to Lderitz are ongoing.

Partnering with government and privateinstitutions has enabled Namdeb to goar beyond complying with minimum legalrequirements. Namdeb participates in theMillennium Seed Bank Project, together withNamibias Ministry o Agriculture, Water andForestry and the Royal Botanic Gardensat Kew in London. This project researchesthe development o restoration techniques.Rehabilitation planning is co-ordinated withthe Ministry o Environment and Tourismsplanning or the uture Sperrgebiet NationalPark, and ministry sta is directly involvedin Namdebs rehabilitation projects.

An inter-ministerial committee has beenmandated by the Namibian Government toprovide input to Namdebs Strategic Businessand Closure Plan. A amiliarisation visit tookplace in 2007. A rehabilitation programme ispresently being developed which will schedulerehabilitation activities over the coming years.

Environmental certication requirementsThe South Arican Bureau o Standards (SABS)conducted an ISO 14001 surveillance audit duringNovember 2007, and confrmed our continuedcompliance to the ISO 14001:2004 EnvironmentalManagement System. Non-conormities were

classifed as minor, and related to minor legalissues, operational practice and progress withenvironmental management plans. Conclusions werethat the system had been improved, management

actions had been taken, and personnel were keenlycommitted to maintaining and improving the system.

The complement o environmental personnel at theoperations was increased to ensure the maintenanceo the Environmental Management System toISO 14001 requirements. A detailed, ast-trackorientation and development plan was developedto assist with the training o the new recruits.

Health focus continuesNamdeb has a holistic wellness programme thatocuses on the prevention and care o diseases,providing a variety o services and a specifc ocuson HIV and Aids. The HIV and Aids managementstrategy covers a range o key areas, includingcare and support to employees, lie partnersand community members, as well as awarenessand education programmes to support theeorts o government and other stakeholders.

Organisational effectivenessTo enhance efciency and to eliminate unnecessaryduplication and bureaucracy, we continued toembed the principles o workplace accountability

throughout the organization. Accordingly, wehave embarked upon a comprehensive review osystems, policies and processes to make themsimpler, aster and more eective to ensure ast andeective service delivery across the organization.

We have set ourselves an ambitious goal opushing the organizations maturity level romLevel II to Level III, where systems, policies andprocedures are standardized and benchmarkedagainst best practices. We have adopted a newremuneration policy and retention strategy, aswell as a review o the current employee valueproposition to meet the ever changing needso a diverse and knowledgeable workorce.

Safer operationsThe combined lost time injury requency rate (LTIFR)or all o Namdebs operations was 0,17 in 2007

(compared to 0,35 in 2006). Although we havezero tolerance towards injuries and accidents,the 2007 LTIFR is a commendable improvementon the previous year. Namdeb also recorded six

million atality-ree shits, which is a remarkableachievement or an operation o its size and age.Our business philosophy and principles require allNamdeb operations to adhere to the national saetylegislation and work towards best practice saetystandards such as OHSAS 18001 and the NOSAIntegrated Saety, Health and Environmental System.We continued liaising with regulatory agencies,employee representatives and local communities topromote partnership on saety issues and enablea supportive and accident-ree saety culture. Allemployees and contractors ollow health and saetypractices consistent with our health and saety policy.

All Namdeb operations hold the fve-star plati numNOSCAR status, graded on the NOSA IntegratedSaety, Health and Environmental system. Since2005, all our active operations have been includedin the list o NOSA Top 100 International MiningCompanies. We are particularly pleased that in 2007,Elizabeth Bay Mine was awarded frst position in thisleague, with Orange River Mine named as runner-up.

Similarly, during November 2007, Namdebachieved a new milestone by obtainingOHSAS 18001 certifcation.

Environmental managementEective management o the impact o mining andrehabilitation is part o any good mining process andmines are accountable or ensuring that the impactedareas are rehabilitated. In line with the Minerals(Prospecting and Mining) Act o 1992, Namdebsenvironmental and rehabilitation policies prescribethe rehabilitation requirements in its license areas.

To ensure that Namdeb ully complies with nationalrehabilitation standards (or, in the absence o nationalstandards, global best practice), the companyhas contracted a specialist desert ecologist todevelop its comprehensive rehabilitation plan. Thisapproach has provided a strong scientifc basis orthe rehabilitation plan, allowing the ormulation opractical solutions with a clear business case.

Managingdirectors review continued

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About 90% o the employees are well inormed andfnd the wellness programme useul and interesting,according to the latest Key Area Perormance (KAP)survey. During 2007, more than 80% o employees

undertook voluntary counselling and testing.

Anti-retroviral therapy is provided at no chargeto employees and lie-partners. The majority oNamdeb HIV-positive employees are registered ortreatment, with 80% compliance. There has been anoverall decrease in HIV prevalence due to employeemovements (reducing rom 11,4% in 2003 to 8,7%in 2007) and in most age groups and job bands.

Preferential procurement and entrepreneurshipThe Namdeb black economic empowerment (BEE)policy provides guidance on how the companycan contribute to the Namibian transormationrequirements and the national Vision 2030development strategy. It aims to oster a culture oentrepreneurship among historically disadvantagedNamibians, promote the development o commercially

Managingdirectors review continued

viable and sustainable businesses, and acilitatethe transer o capacity to Namibian suppliers.

In 2007, Namdeb had N$1,48 billion in controllable

procurement spend, o which N$633 million(42%) was with accredited Namibian companieswith various levels o transormation status.

The company concentrates its procurementempowerment eorts on businesses which havea broad-based empowerment status, are basedin the regions o Namdeb operations, and providethose products and services that are requiredby Namdebs range o business activities.

Oshipe Development Fund, a wholly-ownedsubsidiary o Namdeb, contributes to smallenterprise development through fnancialassistance, ongoing monitoring and businessadvice. To date, Oshipe has invested N$8,9million in seven businesses, o which N$3,6 million(73%) were in fve projects by the end o 2007.

In April 2007, the Ofce o the Prime Ministerappointed consultants to design a transormationstrategy or Namibia. This process o TransormationalEconomic Social Empowerment Framework(TESEF) incorporates a number o the key principlesthat Namdeb has incorporated in its preerentialprocurement activities, and the company contributesto TESEF at its own operations, within the NamibianChamber o Mines, and at strategic and nati onal level.

Corporate social investmentIn pursuit o its business goals, Namdeb iscommitted to sustainable development, especiallyin the local communities where it operates.

The Namdeb Social Fund is the countrysleading corporate social responsibility und,and has donated over N$20 million to variousbenefciaries since its inception in 1994.

In 2007, the und contributed N$3,3 million to some40 projects in areas including education, healthand welare, community development and sportdevelopment. Education was the biggest benefciary,receiving 36% o the unds donations; this wasollowed by health and welare (16%), communitydevelopment (12%), public aairs (12%) and small

business development (11%). More details o theunds donations can be ound on pages 34 and 35.

Building our skills base

Namdeb is committed to the development andenhancement o critical mining skills. In the yearunder review, 27 young Namibians were sponsoredby Namdeb at tertiary academic institutions insouthern Arica, to pursue studies in varioustechnical disciplines core to Namdebs operations;25 o these students were rom historicallydisadvantaged groups and nine were emale.

Ten bursary holders completed their studies andtook up employment with Namdeb as graduatetrainees in 2007, and another fve were in their fnalyear o studies. Twelve bursaries were awarded orthe year 2008 in the felds o engineering, control andinstrumentation, metallurgy, mining, administrationand geology. This takes the total value o Namdebbursaries in the year ahead to N$2 million.

Namdeb also operates a grant scheme whichprovides fnancial assistance with no paybackobligations to deserving Namibians who wishto urther their studies. During 2007, 187 peoplebenefted rom the scheme, including 63 dependantso Namdeb employees. Both the bursary and grantschemes supplement talent management andare aligned to the human resources developmentplan as outlined in the national Vision 2030.

Details o these and other skills developmentinitiatives can be ound on pages 30-32.

Outlook for 2008The Sida Ei !gs project, which commenced ul limplementation in the ourth quarter o 2007, set theconceptual ramework or the uture o Namdeb landoperations. I ully implemented, the strategy holdsimmense potential to reposition the land operationsas a much smaller and decentralized businessunit, while still making a signifcant contributionto production and revenue or its shareholders.However, it must be accepted that it will not beable to sustain the current levels o employmentand the overheads associated with maintainingthe town o Oranjemund. We have over the lastfve years or more been communicating to all

stakeholders the challenges posed by the decliningcarats profle and the need to prepare or the lowerproduction outputs we are witnessing today.

There remains potential i the Carats Tomorrowprojects are able to add new reserves that canextend the lie o mine and save some jobs. We arethereore committed to pursuing these opportunitiesin line with our chapter 2 BHAG strategy, to ensurethat the company delivers 10 million proftablecarats and a distributable amount o N$1,1 billionto our shareholders by 2010. This can only beachieved by ensuring that the organisation is quickand eective in its response to challenges at bothan operational level and in the global market.

The next two years will thereore see signifcantchanges as we strive to position Namdeb or uturegrowth with a structure and culture that is ft orpurpose. The act that we are witnessing manyundamental changes within our company is asign o strength and that we are indeed a learningand proactive organisation. It is a testimony toourtenacityandexibilitythatwecontinueto

thrive in rough times, as we have done throughthe 72 years o diamond mining in this country.

Inge Zaamwani-Kamwi

Managing Director

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The project has developed to the stage where a test

production unit is required to veriy certain critical assumptions

in order to substantiate the business case, and the necessary

preparations to start construction o this unit by the end o

2008 are on track.

The Jet Rig inter-tidal corridor sampling machine is in the

process o gathering bulk samples, while the Seawalker

platorm is being converted or sampling in the ultra shallow

water during 2008.

Production ramp-up rom this potentially high prospective

block is scheduled to commence in 2009.

Mining Area 1The mini-mine concept has been proven successul over

the past two years as an eective way o mining accreted

areas and spreading risk in the north o Mining Area 1 (MA1).

Diamond Area No 1: Over one million caratsproduced on landDiamond Area No 1, situated on the south-western

coast o Namibia, is an important contributor to

Namdebs production. The carat production ell short

o the budgeted target by 7% and the tons treated

by 5%. The main actor in the negative variance in

Diamond Area 1 was that 3 Plant was not in operation

or approximately fve months due a fre incident that

damaged its motor control centre. The impact was

mitigated by treating the diamondierous material at

4 Plant on a continuous operation bases.

Conventional mining operations at 3 Plant, 4

Plant, Recovery Tailings Retreatment (RTR) plant,

Pre-treatment Facility (PTF), Pocket Beaches,

Elizabeth Bay and Orange River Mines continued.

Technical challenges were experienced at the RTR

plant during the frst quarter o 2007. These were

resolved during the year. The planned tailings dump

retreatment operations at 3 Plant were postponed as

additional ore o economical grade became available.

Mining at Pocket Beaches Site 2 was completed

with the depletion o the ore body. The plant and

workorce were successully deployed to Sites 11 and

12. Commissioning o the plant started during the

last quarter o 2007 and ull production is expected

during 2008. The fnal recovery acility was relocatedto the Orange River Mines to recover diamonds

rom stored X-ray tailings. At Elizabeth Bay, the

upgraded ront end was successully commissioned.

Inshore Project at advanced stageProject work to prove the technical and economic

viability o exploiting the Inshore mining area is at an

advanced stage.

This area comprises the Inter Tidal Corridor and Ultra

Shallow Water portions o the land-based mining

licence, and is typifed by shallow water and high

energy sur which is inaccessible to sea-going vessels.

Innovative technologypays dividends

Economicperormance

Jet rig sampling platform in operation

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The larger-than-expected average stone size

contributed to a very good fnancial perormance. The

increased stone size was mostly due to shortalls rom

the land-based contractor being made up by additional

production rom the shallow marine operations. During

the course o 2008, it is anticipated that the shallow

marine sector will expand by 33% with the addition o

three more vessels.

Pocket Beaches Phase 2 implementedSeveral diamond-bearing ore pockets have been

identifed and sampled in the area between Chameis

Bay and Bogenels Arch. The frst, Site 2, which

was brought into production in March 2004 using

conventional mining methods and a mobile treatment

plant, was depleted during early 2007.

Phase 2, ocusing on the mining o Site 11 andSite 12 (which contain a number o rich areas), has

commenced production during 2007. Concurrent with

dredging o overburden in the highly permeable water

rich areas, conventional dry mining commenced in

other more accessible areas.

Specialised cut-o wall technology is employed to orm

an active buer, preventing uncontrolled seepage o sea

water into the mining blocks. These will be drained ater

dredging and mined in the normal dry-mining ashion.

Although ully operational, production ramp-up is

slower than planned and technical challenges are

receiving the necessary attention.

MineSight, a mine planning sotware package, was

introduced to assist with eective monthly plans. The

Phase II upgrade o the primary crushing section was

successully commissioned and the tonnage through

put was ramped up to the design capacity o 800

tons per hour. Minor punch list items are still to be

addressed in 2008.

The auxiliary tip had a lower than expected availab ility

which resulted in a tonnage shortall o 9%. The carat

recovery was 3% above the budget o 331 000 carats.

This was the highest carat recovery or any value centre

in recent history.

In the continued eort to eliminate diamond thet,

investigations by the security department uncovered a

syndicate operation resulting in the discharge o two

employees.

Northern Areas Midwater ProductionThe management o the Epia/Trans Hex midwater mining

contract was taken over by Namdeb rom DBMN in

April 2007. The vessels mined 87 731m o seabed and

recovered 37 334 carats in 2007. This exceeded the

expected production by 33%. A new agreement was

negotiated or a urther period o two years.

Beach and marine contractor operationsContractor operations recovered 29 776 carats in 2007

rom the combined sur zone, shallow marine and land-

based operations. This was 1% below the expected

production.

were treated, o which 2,7 milli on tons were mined

by contractor B&E. Total waste removed in 2007

amounted to 4,5 million tons.

Orange River Mines also retained its NOSCAR statusor the ninth consecutive year, and obtained OSHAS

18001 accreditation; it also retained its ISO 14001

status. It is worth noting that out o the top 100 mining

companies in southern Arica, the Orange River Mines

were placed second or saety. The rehabilitation o

old, worked out mining areas and management o

environmental impact on new areas continues to be

a priority.

Elizabeth Bay Mine: record performanceNorthern Areas Mines received its tenth consecutive

NOSCAR, obtained OSHAS18001 accreditation

and retained ISO 14001 certifcation. It obtained the

number one position in the top 100 mining companies

in southern Arica in saety. No lost time injuries were

recorded during the year.

The mineral resource department was able to add an

additional 150 000 carats to the resource in 2007. The

crushing capacity o the Northern Area Sampling Plant

(NASP) was improved by the installation o a mobile

crusherunitaspartoftheowsheet.Aworking3-D

geological model has been introduced to manage the

resource more eectively. 2007 saw high Mine Call

Factors (MCFs) in the frst hal o the year and low

MCFs in the second hal, resulting in an average MCF

o 0,95.

The bulk o the run-o-mine material originated rom

the southern regions o the ore body, where bigger

stone sizes and high average grades occur. Due to its

close proximity to the sea, dewatering o mine sites

was a challenge, which was overcome with additional

pumping capacity.

A new stripping contract o 1,8 million tons was

awarded to HPC Civils with RCC/Teichman continuing

with an additional 1,3 million tons. Blasting activities

continued as normal in the blocks where consolidated

material was encountered.

The same concept is currently being applied to

the G100 mine in the south o MA1. These smaller

areas improve the management o sea walls and the

creation o clear workplace accountability on site.

The mini-mines have contributed to the increasedcarat production and extended lie o MA1.

Because o increased hauling distances, Wet In-Field

Screens have been erected at the most northern

mines to decrease hauling and plant costs. The Wet

In-Field Screening product is approximately 30% o

the run-o-mine volumes.

Orange River MinesThe Orange River mining area stretches rom the

Orange River mouth in the west to Sendelingsdri

in the east and currently ocuses on the mining o

ancient gravel terraces at Daberas. The current mining

plan indicates a remaining production lie o two and

a hal years at Daberas, ending in the second quarter

o 2010.

However, overall resource depletion o the Orange

River mining area is still in its inancy as only

Auchas and Daberas have been partially mined to

date; signifcant resources still remain at Arisdrit,

Auchas Lower, Auchas (remnant mining), Obib and

Sendelingsdri. A pre-easibility study has been

completed on the Sendelingsdri deposit so that

mining may start once Daberas is depleted. However,

current resource grade renders Sendelingsdri

unproftable.

In order to better get a frm understanding o the grade

o the resource at Sendelingsdrit, a sampling exercise

was initiated in 2006 which continued through 2007.

This exercise will only be concluded at the end o

2008. Based on the success o the sampling results, a

ull easibility study maybe will be initiated that will lead

to the construction o Sendelingsdri mine.

In 2010, Sendelingsdrit may become the next mine in

the Orange River Area.

In 2007, a total o 85 000 carats were recovered rom

Daberas Mine. Altogether 6,1 million tons

Economicperormance continued

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Building a sustainableOranjemund

About 10 years ago, Namdeb started a major initiative

o building a sustainable Oranjemund that will

continue to exist independent o its mining operations.

Building a positive legacy is one o t he three strategic

objectives o Namdebs business strategy adopted in

2007 and the sustainability o the town orms a key

initiative under the positive legacy leg o the strategy.

In 2004 Namdeb registered Oranjemund Town

Management Company (Pty) Ltd (OTMCo), a wholly-

owned subsidiary o Namdeb, as a vehicle to drive

the sustainability initiative and secure a long-term

uture or the town. Together with senior Namdeb

management and the Mineworkers Union, t he residents

o Oranjemund and local businesses are ully

represented on the board.

The purpose o the OTMCo is ourold:

To implement and manage the townestablishment process to declare Oranjemundas a Local Authority in terms o the Local

Authorities Act (Act 23 o 1992);To initiate and develop a diversifed economicbase or Oranjemund to ensure that the town willcontinue to exist without the mining activity;

To build capacity or eective townmanagement and administration to ensurethat when the Local Authority i s established,the town has the necessary knowledge,skills and experience or a smooth transitionrom a mining town to a local authority;

To administer and manage well-establishedmunicipal and other related services as

a orerunner o a local authority.

Town establishmentThe town establishment process will create property

rights and institute a Local Authority Council to

promote town sustainability as it will create security

o tenure and acilitate open access to Oranjemund.

Oranjemund will be ready in September

2008 to be proclaimed as a town in terms

o the Town Planning Ordinance.

This will trigger the process o instituting a Local Authority

Council in terms o the Local Authorities Act o Namibia. The

Council will be preceded by local authority elections under

the guidance o the Electoral Commission o Namibia. We

expect the Local Council to be in place early 2009 while open

access and land transactions can only take place ater the

Local Council is instituted.

Two major issues that might delay the institution o the

local authority are the agreements between Namdeb and

Government on asset transer, maintenance and operation,

and the proclamation o the Oranjemund-Rosh Pinah road to

link Oranjemund with the rest o Namibia.

Diversify economic baseThe Namdeb Board has approved N$5 million to investigate

alternative sustainable economic opportunities that can

support the town and create alternative employment

prospects. Following an open tender process, three

consultants were appointed to conduct easibility studies or

the development o:

1. Mari-culture in the mined-out ponds;

2. Tourism;

3. Agriculture; and

4. Secondary school and technical training centre

The easibility studies or mari-culture, tourism and agriculture

are completed while the study on the secondary schooland technical training centre will be completed in August

2008. The remainder o the N$5 million is earmarked or an

integrated mariculture pilot project in one o the mined-out

ponds. A submission was made to the board to approve the

pilot project. The tourism potential o the town has already

attracted interest rom large scale private investors to develop

signifcant tourism products and services.

Capacity building and effective town managementOTMCo has continued to develop local municipal skills

while educating the community through several ormal and

inormal sessions on their civic responsibilities once the Local

Authority Council takes over the management o the town. The

involvement o the community has increased signifcantly over

the last two years with more than 100 community members

attending each o the last two ormal sessions.

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Preerentialprocurement

Preerential procurement helps ensure that mining

revenues stimulate growth in other sectors. It also

helps oset historical economic inequalities.

Procurement arrangements orm a critical

component o the De Beers strategy ordriving economic development wherever it

operates. Procurement policies and procedures

are highly developed in Namibia.

Each o our operations also works with existing

suppliers to assist them in their transition to

becoming BEE-owned and transormed

businesses. The Namdeb BEE Policy provides

guidance on how the company can contribute to

Namibian transormation requirements and the

national Vision 2030 development strategy.

It aims to oster a culture o entrepreneurship

among historically disadvantaged Namibians

(HDNs), promote the development o commercially

viable and sustainable businesses, and acilitate

the transer o capacity to Namibian suppliers.

Specifc guidance on the identifcation and

prioritisation o historically disadvantaged

local suppliers is given through Namdeb's

preerential procurement policy that requires

the accreditation o a suppliers BEE status.

Preerence is given to enterprises owned by

HDNs, BEE enterprises and Namibian enterprises.

The Namibian Preerential Procurement Council

(NPPC) is working with the government to

develop consistent HDN criteria and guidance.

In 2007, Namdeb spent US$7,8 million with HDN-

owned,empoweredandinuencedbusinesses.

This expenditure is likely to increase as the national

ramework is progressively implemented.

Namdeb: Value of spend - accredited vs not yet accredited suppliersJan 07 - Dec 07

Millions

NAD 100

NAD 90

NAD 80

NAD 70

NAD 60

NAD 50

NAD 40

NAD 30

NAD 20

NAD 10

NAD

NPPC accredited

Not yet accredited

Jan-07 Feb-07 Mar-07 Apr-07 May-07 June-07 July-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

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Socialperormance

During the year under review, Namdeb improved

benefts to its employees by;

Allowing employees on one-year, fxed term

contracts to be registered as members o the

Provident Fund.

The introduction o the Sida Ei !gs incentive

scheme by incorporating all other schemes into

one team based scheme or all employees rom

A-band to D-band.

Total employees per work areaMining Area 1 2 429

Orange River Mining 249

Northern Areas 262

Head ofce 42

Total 2 982

Status of employeesCitizens 2 880

Permanent residents 63

Expatriates 39

Employment typePermanent 2 435

Fixed term-contractors 547

Contractors 54

Temporary 56Total 3 092

Labour turnover2002 11,0%

2003 6,7%

2004 9,1% (total turnover)

6,2% (excluding voluntary separation)

2005 6,0%


5,0% (excluding dismissals and

retirements)


6,0% (exclude dismissals,

retirements and voluntary

separations)

A model union relationshipThe Mineworkers Union o Namibia (MUN) is the

recognised union in the mining industry and most

o Namdebs employees (69,1%) are members.

During the year under review, Namdeb and

MUN signed an occupational saety, health and

environmental (SHE) Agreement which is aimed to

set down principles and procedures which shall

govern the relationship in respect o SHE matters.

Namdeb has introduced the policy on voluntary and

random testing or alcohol and drugs. This policy has

a preventive emphasis in the orm o early detection

and rehabilitation. This initiative will improve saety

conditions at Namdeb and will also undoubtedly

have a positive spin-o on the quality o work and

amily lie which we at Namdeb strive to nurture in

accordance with our values, especially that o care.

Considering the travelling times or our employees

who work continuous operations at our Orange

River Mines, Namdeb applied to the Ministry o

Labour and Social Welare or an exemption rom

the seven-days-onseven-days-o regulations, to

allow 14-days-on-14-days-o. With due regard

to employee saety on the road, the company

extended the mustering point rom Keetmanshoop

to Tsumeb. This change enabled employees to

spend longer periods with their amilies back home.

Building our skills baseNamdeb is committed to the development and

enhancement o critical mining skills. Thirty-

three young Namibians are currently sponsored

by Namdeb at tertiary academic institutions

in southern Arica, pursuing studies in various

technical disciplines core to Namdebs operations.

During the year under review we sponsored 27

bursars o which 25 were historically disadvantaged

and nine were emale. Ten designated group

bursary-holders completed their studies and

took up employment with Namdeb as graduate

trainees. Another fve are in their fnal year o

studies and will commence work in 2008.

Twelve bursaries were awarded or the year

2008 in the felds o engineering, control and

instrumentation, metallurgy, mining, administration

and geology. This takes the total value o Namdeb

bursaries in the year ahead to N$2 million.

Namdeb also operates a grant scheme which

provides fnancial assistance with no payback

obligations to deserving Namibians who wish

to urther their studies. As o 2007, a decision

was undertaken to allocate the grants twice a

year to beneft more deserving Namibians.

An amount o N$415 813 was contributed

towards tuition ees or meritorious Namibian

students studying at various institutions in dierent

felds. During 2007, 187 people benefted rom

the scheme. N$129 865 o this was awarded

to 73 dependants o Namdeb employees.

Both the bursary and grant schemes supplementtalent management and are aligned to the human

resources development element o Vision 2030.

There are various training and development

initiatives ongoing at Namdeb. The Namdeb Sel

Study Assistance scheme encourages employees

to urther their studies in felds o their choice; on

successul completion, they receive 87,5% payback

o the money they used to study. Approximately

N$150 000 was spent on employees in 2007.

Namdeb collaborates with the Maccauvlei

Learning Academy to develop employees. The frst

programmes were introduced in the early 1990s and

to date approximately 250 employees have gone

through these programmes.

Some N$710 000 was spent in 2007 on twenty-nine

ull-time employees who were on developmental

programmes. These programmes prepare them to

be appointed to positions held by non-citizens, and

to enhance their supervisory and training skills.

Technical training also plays an integral role

at Namdeb. Training or artisans, mining and

metallurgical operators is on-going to ensure that

we keep abreast o technological advancements.

Technical training also plays an integral role

at Namdeb. Training or artisans, mining and

metallurgical operators is on-going to ensure that

we keep abreast o technological advancements.

In 2007 N$676 581 was spent on Namdeb

artisans through various external courses.

During the year under review 50 job attachments

rom Namibian institutions such as NIMT, Valombola

Vocational Training Centre, Windhoek VocationalTraining Centre and the Mechanical Training Institute

were accommodated. In September 2007, 25 trade

bursars were oered bursaries as electricians, diesel

mechanics, millwrights and ftter and turners.

A highlight o 2007 was the Sida !nans

teambuilding and diversity training intervention.

This resulted in a better understanding o

diversity and improved teamwork and cost the

company about N$3 million. Employees rom the

Managing Director down to the lowest category

o employees have attended this training.

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Socialperormance continued

In support o harnessing talent, the young

proessionals orums have proved to be hugely

successul. Such orums allow our graduates rom

all disciplines the opportunity to share and learn

rom each other as a peer group, as well as rom

senior managers who share their experiences. We

have approximately 30 Namibian employees in our

employment who all within this category at any

given time. Their disciplines range rom technical

areas o mining, engineering, metallurgy, and mineral

resources to those o human resources and fnance.

SafetyOur principles require all Namdeb operations to

adhere to national saety legislation and work

towards best practice saety standards such as

OHSAS 18001 and the NOSA Integrated Saety,

Health and Environmental System. We work with

regulatory agencies, employee representatives

and local communities to promote partnership

on saety issues and enable a supportive and

accident-ree saety culture. All employees and

contractors ollow health and saety practices

consistent with our health and saety policy. We

conduct regular internal and external health and

saety audits to evaluate our perormance.

Key risksAll occupational health and saety risks are managedthrough ongoing hazard identifcation and risk

assessments, as well as implementation and

monitoring o control measures to reduce such

risks. A Namdeb risk log is kept or all identifed

risks. The six top saety risks have been identifed

as ollows and are managed through critical

procedures and emergency response plans:

Vehicles

Isolation/electricity

Height work

Conned space work

Lifting operations

Flooding

Managing these risks requires stringent

adherence to standards developed to ensure

sae conditions and efcient operations. It also

requires a culture o saety consciousness and

sae behaviour by the workorce, reinorced by the

participation o management, systematic training

and regular internal and third party audits.

Preventing fatalitiesAll incidents are thoroughly investigated and

reviewed with a clear view to achieve our zero

atalities target. During November 2007, Namdeb

recorded six million atality-ree shits.

Management systemsAll Namdeb operations have fve-star platinum

and NOSCAR status on the NOSA Integrated

SHE System. Since 2005 all our operations

have been listed on the NOSA International

Top 100 Mining Companies list a nd in 2007

Elizabeth Bay Mine was awarded frst position

with Orange River Mine as runner up.

During November 2007 Namdeb achieved a

new milestone by obtaining OHSAS 18001

certifcation. The current Lost Time Injury

Frequency Rate is 0,17 (per 200 000 hours).

We require contractors to adhere to the samestandards as our own employees; contractors

are required to attend induction programmes

beore working on mine sites. When contractors

are ound to have insufcient skills or knowledge

o our health and saety procedures, they are

provided with the appropriate training beore

being permitted to work. Contractors commit to

our saety policy when entering into contracts,

and are monitored on perormance.

In the quest or ever-increasing saety, the Alcohol

and Drug Abuse Management Programme

introduced random and voluntary testing

during 2006; this has delivered positive results

with a signifcant decrease in alcohol related

vehicle accidents over the past two years.

Engaging employeesFormal mechanisms or engaging and building

employee awareness on saety issues include

management briefng sessions, mine wide notices,

saety alerts, reresher saety inductions, stop

production or saety sessions, videos, posters,

saety campaigns and ormal saety meetings.

The aim o these meetings is to discuss issues o

concern to employees and determine how they

should be addressed. Issues that are not resolved

may be escalated to the Saety Committee.

Namdeb has a saety and health agreement with the

Mineworkers Union o Namibia which allows or a

communication structure within the company, at various

levels, which culminates in a communication orum

involving all representatives at senior management

level. Two ull time saety and health representatives,

elected by the workorce, are employed and each

business and unctional unit workplace saety and

health representative is elected and appointed in

line with the Saety and Health Agreement.

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Socialperormance continued

Namdeb Social Fund (NSF) donation highlightsNamdeb has successully helped to develop Namibian

society through its substantial investment in social,

educational and environmental projects. Millions o

Namibian dollars have already been spent on projects

ranging rom the largest o benefciaries to the support

o small business initiatives. Namdeb remains the

largest corporate responsibility contributor to the

socio-economic development o this beautiul nation.

Every year, the NSF donates well over N$1 million and

has since its inception in 1994 donated in excess o

N$25 million. This contribution has signifcantly aided

the development and prosperity o Namibian society in

line with the unds vision to be the leading Namibian

corporate social investment und.

Thissocialinvestmentreectsafundamental

commitment by Namdeb to good corporate

citizenship; also it complements and extends

the ar larger contribution to Namibias economic

development, which the company makes through

its successul business activities.

In 2007, the und invested more than N$3,3 million in

orty projects and institutions rom all over the country.

Education was the biggest benefciary at 36%,ollowed by health and welare (16%), community

development (12%), public aairs (12%), and small

business development (11%). Other benefciaries were

in the categories o youth & development, and sports.

The ollowing are some highlights o projects that

received signifcant donations in their respective

categories:

Education (N$1 221 225)Waldor School Windhoek: N$200 000 donation

towards the purchase o equipment or the

chemistry and science laboratories

Southern Cluster: N$200 000 towards the

construction o two classroom blocks or the

secondary school in Lderitz

ETSIP: N$200 000 towards the GRN education

initiative

Gobabeb Training and Research Centre: N$150

000 donation towards the centres research andtraining activities

Helena van Rijn Primary School in Lderitz:

N$87 000 sponsorship towards the purchase

o a school mini bus

Institute or Domestic Science & Agriculture:

N$87 000 purchase o training equipment or

the institution

Michelle McLean Childrens Trust: N$60 500

sponsorship towards the Grade 12 fnancial

skill training in the Caprivi and Karas regions

Martin Luther High School: N$57 000 or

purchasing o chairs in their assembly hall

Orison Educational Services: N$50 000

sponsorship o the National Mathematics

Congress 2007

WorldTeach: N$50 000 sponsorship o teacher

volunteers

Health and Welfare (N$556 000)NDTC: N$100 000 sponsorship o Project Etango

Health Unlimited Namibia: N$100 000

sponsorship o adolescent sexual reproductive

programme

Dr Christine Swart Opperman AIDS Orphan Trust: N$50 000 towards the charity orphanage's

activities

Vernas Academy o Dress Design: N$50 000

sponsorship o the academys annual activities

Cancer Association o Namibia: N$50 000

sponsorship o the associations activities

Community development (N$396 852)Aus Community Conservation Trust: N$200 000

donation towards the water recycling plant

Municipality o Karasburg: N$100 000

sponsorship o computer equipment or the

council

NACOBTA: N$61 852 sponsorship o the

production and marketing o material on rural

tourism

Public affairs (N$400 000)Ministry o Trade and Industry: N$200 000

sponsorship o the trade and investment conerence

National Park Etosha Centenary Project: N$100 000

towards the production o a map and tour guide

PALDIF: N$50 000 donation towards the oundation

LSI Foundation: N$50 000 donation towards theoundation

Small business development(N$350 000)

Namibia National Chamber o Commerce:

N$200 000 sponsorship o the SME toolkit via

Oshipe

Oshipe: N$80 000 sponsorship o the ranchise

conerence

Elephant Crat Centre: N$70 000 towards

purchasing o the dust collecting equipment and

raw materials

Sports received N$73 840, Youth and development

N$135 000 and the E/Bay and NamGem discretionary

unds received N$150 000 and N$50 000 respectively.

N$

Education 1 221 225

Health and welare 556 000

Community development 396 852

Small business development 350 000

Youth & development 135 000

Public aairs 400 000

Sports 73 840

E/Bay Discretionary Fund 150 000

NamGem Discretionary Fund 50 000

Total 3 332 917

36%

2%5% 2%

16%12%

12%

11%

4%

E/Bay Discretionary Fund

Education

Sports

Health and Welfare

E/Bay Discretionary Fund

NamGem

Community Development

Small Business Development

Youth and Development

Public Affairs

NSF donation summary Jan-Dec 07

Bicycles and packs donated by the NSF to volunteers

at Cheshire Home Anamulenge

Benefciaries o NSF donation to CLaSH or Operation

Omakutsi, which is middle ear surgery to restore

hearing to patients

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Environmentalperormance

ISO 14001: 2004 certicationNamdeb is ISO 14001 certifed or all activities,

products and services that the organisation controls

orinuencesthathaveorcanhaveasignicant

impact on the environment, related to Mining Area1 (Mining, Treatment, Mineral Resources, Waste

Management and Engineering Departments), Elizabeth

Bay Mine, Orange River Mines and Exploration.

The South Arican Bureau o Standards (SABS)

conducted an ISO 14001 surveillance audit during

November 2007. Continued compliance o the

ISO 14001:2004 Environmental Management

System (EMS) o Namdeb was confrmed. Non-

conormities recorded were related to legal i ssues

and operational practice and progress with

environmental management plans. All the fndings

were classifed as minor. Conclusions were that

the system had been improved, management

actions had been taken, and personnel were keenly

committed to maintaining and improving the system.

The complement o environmental sta at

the operations was increased to ensure the

eectiveness and maintenance o the EMS to the

ISO 14001 requirements. A detailed, ast-track

orientation and development plan was developed

to assist with the training o the new recruits.

Year Major Moderate Minor Near-miss

2004 0 17 90 30

2005 0 7 106 21

2007 0 15 113 10

2007 0 6 63 15

Environmental incidentsNo major environmental incidents occurred and

no fnes were incurred during 2007. Moderate

environmental incidents included mostly uel and

lubricant spillages. Incident trends are recorded to

aid the investigation process, which includes

determining root causes and drawing up mitigation

plans. Whenever it i s necessary, internal standards

are reviewed as part o the corrective action. Sites are

established in Namdebs licence areas to remediate

contaminated soil. Various designs are tested to

determine an eective remediation process.

Environmental expenditureThe total environmental expenditure or 2007 is

N$9 021 728. This includes working costs, capital

projects and environmental sponsorships. These costs

are or environmental research, rehabilitation, water

management, waste management, environmental

personnel, environmental training, administration,

environmental management systems and consultancies.

Environmental incident type trends for 2007

Spillage of fuel and lubricants(outdoors and > 25 litres indoors)

54% Release of hazardous substances intothe environment (e.g. paint, fluoresenttubes, batteries, radiation sources

18%

4%

4%

2%

0%

0%

1%

1%

16%

0%

Incorrect waste se per ation Spi ll age of fine tai lings (sl imes )

Spillage of effluent (e.g. sewage)

Misuse of natural resources (e.g.water, electricity)

Other environmental incidents

Illegal dumping and littering

Wildlife and plant incidents(disturbances, collection,killing/hunting illegal fishing)

Disturbance of historical,paleontological andarchaeological sites

Uncontrolled driving offexisting tracks and roads

Identiying plants o conservation importance

in areas to be mined is the frst step in

developing practical management actions

or illegal fshing)

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Environmentalperormance continued

Costs (N$) 2007

Costs Environmental Expenditure (N$) 2007

Capital Costs 5 406 075

Working Costs 3 496 415

Sponsorships 119 238

Total 9 021 728

Water consumptionNamdeb uses mainly sea water (86% o the total

water consumption) and only a small portion

o non-potable water or its mining operations.

Processing plants recycle a large portion o theirwater. Only one third o the consumed resh water

all abstracted rom the Orange River is used or

mining operations; the remainder is or domestic

consumption. Some six percent o the reshwater

is recycled and re-used or the watering and

maintenance o public parks and the local gol course.

Impact assessments and monitoringThe Environmental Impact Assessment (EIA)

process is conducted in all Namdebs operations

to enable the company to identiy various potential

environmental impacts at an early stage o a

project, operation, mining or prospecting activity.

Namdeb has dedicated internal human resources

to ensure environmental requirements are

assessed and included in the mine lie cycle rom

the exploration phase to the closure o a mine.

A site visit was undertaken by the Environmental

Department o De Beers RSA Group Services

to the Group Exploration Namibia Project in the

Caprivi. The visit was aimed at assessing risks

associated with the exploration activities and

developing mitigation plans. Other objectives

included the initiation o an environmental

monitoring and reporting programme and theintroduction o the Exploration ECOHS guidelines.

De Beers Marine Namibia, on behal o

Namdeb, awarded a contract to the Centre or

Scientifc and Industrial Research (CSIR) or:

reviewingandupdatingtheAtlantic1MiningLicence

Environmental Management Programme Report;

developinganEnvironmentalImpactAssessment

and Environmental Management Plan or

Mining Licences 128 A, B and C; and

conductinganEnvironmentalImpact

Assessment and developing an Environmental

Management Plan or the easibility phase

o the Marine Dredging Project.

All three contracts are still in progress.

A baseline survey was conducted or monitoring the

environmental eects o sediment discharges rom the

Uubvlei treatment plant on sandy beach and rocky

inter-tidal biota in Mining Area 1. The monitoring o

environmental eects o Pocket Beach mining on sandy

beach and rocky inter-tidal biota continued. A baselinesurvey was conducted o the near-shore marine

benthic communities in the Bogenels area. The annual

monitoring survey o inter-tidal and sub-tidal rocky

shore communities at Elizabeth Bay also continued.

Risk assessments were conducted or the

Large Diamond Recovery (LDR) project and the

Geological Sampling Recovery (GSR) project.

Energy consumption andgreenhouse gas emissionsNamdebs main energy consumption is

related to uel used in its earthmoving

andvehicleeet,andingenerators.

Namdeb re-uses oil by burning this to generate heat

or drying gravel during the sorting process. Some

oil is recycled. Employees are brieed regularly on

the need to save energy, and labour shit systems

have now been adapted to enable energy savings.

Initiatives to manage the mining footprintNamdebs rehabilitation plan was fnalised at the end

o October 2007. Seven pilot projects were devised

to more accurately cost the tasks o rehabilitation to

eed into the detailed cost estimate or the March

2008 board meeting.

The frst o the pilot projects have been completed

and signed o. These were the rehabilitation o

overburden dumps and mined areas at Auchas and

disturbed areas along the road rom Sendelingsdri to

Oranjemund. The other pilot projects in Mining Area 1

and along the road rom Oranjemund to Lderitz

are ongoing.

4%10%

86%

Mining fresh water

Town water

Mining seawater

29%

6%65%

Mining fresh water

Re-used/recycled water

Town water

Environmental Expenditure

The eects o disposal o fnes into the ocean is

monitored in long-term studies o marine organisms

Fresh and sea water consumption in 2007 Fresh water consumption in 2007

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Environmentalperormance continued

Partnering with governmental and private institutions

has enabled Namdeb to go beyond simply complying

with minimum legal requirements. The Millennium Seed

Bank Project, under the umbrella o Namibias Ministry

o Agriculture, Water and Forestry and Royal Kew

Botanic Gardens in London, assists with developingrestoration techniques. Rehabilitation planning is co-

ordinated with the Ministry o Environment and Tourisms

planning or the uture national park and ministry sta

is directly involved in Namdebs rehabilitation projects.

An inter-ministerial committee has been mandated

by the Namibian Government to provide input

to Namdebs strategic business and closure

plan. A amiliarisation visit took place in 2007.

A rehabilitation programme is presently being

developed which will schedule rehabilitation

activities over the coming years.

Biodiversity conservationIn recognizing its responsibility to mitigate the impacts

o mining on the environment, Namdeb supports a

number o conservation projects in the Sperrgebiet.

Namdeb sponsors a research project which

analyses the possible impacts o mining on the

productivityoftheDamaratern,aagshipspecies

to the Namibian coast. This study

Documents

Namdeb_AR_2007_Aug_2008