Taking Liqhobong to one million carats per year Slide 2
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Australia or Japan. By attending this Presentation, you agree to be
bound by the restrictions in this disclaimer. Slide 3 Two adjacent
kimberlite pipes -current production centred on small Satellite
Pipe -adjacent large Main Pipe: rediscovered by Kopane as major
resource Pre-feasibility Study on Main Pipe completed Definitive
Feasibility Study on Main Pipe underway Programme to increase
production to 1M carats/year The Liqhobong Assets A Platform for
Expansion Slide 4 254,000 carats produced since Dec 2005 approx
value $13.6M (Satellite and Main pipe mix) 160,000 carats/year
current production rate - Liqhobong Plant 180,000 carats expected
in calendar 2008 Fine white, fancy yellows and large diamond
recovery $12.3M sales revenue to date - Sales agent: BHP Billiton
Diamond Production Slide 5 Pre-feasibility Study of the Main Pipe
indicates robust economics with resource of 42M tonnes (27.6 cpht),
open at depth Advanced Evaluation to upgrade and expand resource
expected by Q4 2008 Bauer wide-diameter drilling Mining and bulk
sampling through Liqhobong Plant Definitive Feasibility Study (DFS)
underway using internationally recognised consultants - results by
end 2008 2009 - Finance and implementation of a planned 1M
carats/year project; planned commissioning Q4 2010 Taking Liqhobong
to one million carats/year Slide 6 A visit to Liqhobong Slide 7 The
Satellite Pipe One hectare pipe Mine life of approx 5 years (3
remaining) Grade of 68 cpht Average value of ~$40/carat Some fancy
yellows production Facilitated the re-discovery of Main Pipe Makes
cash contribution to LMDC Demonstrates Kopanes ability to build and
operate a mine Resulting in a 20 year Mining Licence for Main Pipe
Slide 8 Liqhobong Process Plant Process Plant construction started
in 2004 and was in production by late 2005: Throughput capacity of
420,000 tonnes/year Treatment of Satellite and Main Pipe kimberlite
(including 44,000 tonnes of bulk sampling) Current output approx
160,000 carats/year while treating Main Pipe weathered kimberlite
ahead of DFS Bulk Samples Scheduled to rise to greater than 200,000
carats/year when reverting to Satellite Pipe only A Unique
Advantage: Industrial scale plant available for Main Pipe sampling
Operator training Cash flow generation Slide 9 Liqhobong Main Pipe
8.5 hectare pipe (330m wide) 7,712m total diamond drilling Multi
Phase Intrusion First bulk sample - 30,120 tonnes, recovering 9,014
carats (average grade of 28 cpht) Second bulk sample 13,861 tonnes
(unaudited), recovering 5,685 carats (average grade 41 cpht) March
2007 Average stone value of $70/ct (excluding bonanza stones) 20
year Main Pipe mining lease agreed February 2007 Slide 10 The
Finnish Joint Venture Mantle Diamonds to develop 28 mineral
exploration claims (29,000 hectares) through JV agreement Mantle
will acquire up to 70% of the Finnish assets by: Spending $5M on
the properties Concluding a DFS on the Lahtojoki property Issuing
Kopane with 2M of Mantle shares Mantle will assume all management
responsibilities for these assets Bulk sampling and wide-diameter
drilling programme (5,500 tonnes) on Lahtojoki. Awaiting
environmental permit. Small DMS plant under construction in RSA.
Slide 11 Implementation at the Liqhobong Site View of the
Processing Plant, October 2007 View of the Processing Plant,
November 2004 Slide 12 Delivery Construction and commissioning of
the Liqhobong Plant 254,000 carats produced with a value of $13.6M
Marketing agreement with BHP Billiton Diamonds NV Rediscovery of
Main Pipe Multi-phased mineralisation (K2 through K6 facies) Higher
tonnages and grade Potential for bonanza stones Main Pipe
pre-feasibility study - economically robust project 8.65M carats
resource base (0.75M carats 2005) Definitive Feasibility Study
commenced due at end 2008 Creation and maintenance of good
relations with Government of Lesotho (GoL) Slide 13 Marketing
through BHPB Billiton Evergreen marketing agreement Liqhobong
diamonds are tendered in Antwerp (10 per annum) Sold a total of ~
230,000 carats since March 06 for US$12.3M Sixty six stones sold
totalling 484 carats realising more than $5,538 per carat Fully
compliant with the Kimberley process Slide 14 Liqhobong Diamond
Sales Calendar YearSales* Volume Sales Value US$M Value per Carat
US$ 2006 H125,3821.12644.4 H230,0253.157105.1 2007
H147,2862.28248.3 H2 77,574**3.80849.1 2008 Q134,5141.85553.7 *
Sales do not occur evenly throughout the year but are made through
10 irregular spaced tenders ** Excludes sale of 13,320 carats of
industrial grade stones Slide 15 Main Pipe PFS - Modelled Mine
& Plant Modelled Kimberlite Resource55.5M tonnes Proposed
Processing Rate3.5 mtpa Initial Mine Life16 years Modelled
Grade27.6 cpht Stripping Ratio (t waste: t ore)1.1 - life of mine
0.25 - in first 4 years Gross Recoverable Carats15.3M carats Net
Recoverable Carats to KDD11.5M carats Cross-sectional Area8.5 ha at
surface and 5.1 ha at 280 meters Slide 16 Main Pipe PFS - Economic
Parameters Indicated Run of Mine Value$70 / carat* Cash Operating
Costs$10.5 / tonne $37.9 / carat Capital Costs (including
contingences and working capital)$100M Gross Value of Recoverable
Diamonds$1,050M * based on a bulk sample of 6,088 carats in 2006
Slide 17 Main Pipe Independent Resource Statement* CategoryGross to
LMDCNet Attributable to KDD (75%) MAIN PIPE Mineral Resources
Tonnes (millions) Grade (cpht) Contained Diamonds (millions carats)
Tonnes (millions) Grade (cpht) Contained Diamonds (millions Carats)
Indicated 14.028.23.910.528.23.0 Inferred 28.227.07.621.127.05.7
Total 42.227.411.531.627.48.7 * Prepared by Geocontracts Botswana
(Pty) Ltd to CIM Standards based upon sampling up to end 2006.
Slide 18 Main Pipe PFS - Operating Upsides ACA Howe International
independent auditor of PFS endorsed its findings saw substantial
upsides in grade, tonnage and stone values Analysis of diamond
production and sales to date implies Main Pipe grade higher than 28
cpht (Q1 2007 13,861 tonnes bulk sample - 41 cpht) Big and bonanza
stones should increase price per carat Each 200,000 tonnes of K4
and K5 facies predicted to yield 4 stones larger than 50 carats and
1 stone larger than 100 carats Source: MM Oosterveld Main Pipe
mineralisation open below current extraction model of 340 meters
below surface (2,190m AMSL) Diamond drilling demonstrates
mineralisation to 650 meters below surface Slide 19 Main Pipe
Definitive Feasibility Study DFS started in October 2007 AMC (study
managers) with DRA, Golders, SRK, Africon, ACA Howe and Bauer
Wide-diameter drilling programme started February 2008 Slide 20
Main Pipe Definitive Feasibility Study DFS started in October 2007
AMC (study managers) with DRA, Golders, SRK, Africon, ACA Howe and
Bauer Wide-diameter drilling programme started February 2008 Bulk
sampling and core drilling programmes New 5tph DMS plant to treat
wide-diameter drilling material Bulk samples to be treated in
Satellite Plant New Resource Statement to be produced Q3 2008 DFS
Opex, Capex and Mine Plan to be completed Q4 2008 Environmental and
Social Impact Assessment to be prepared to Equator Principles
standards Q1 2009 Slide 21 Timeline for Main Pipe Implementation
Preliminary approach to project lenders (H2 2008) DFS completion Q4
2008 Finance and implementation of Power Line project Completion of
finance for Main Pipe project Commencement of Project
Implementation (June 09) Commissioning of Main Pipe project (H2
2010) Slide 22 Kopanes Diamond Sales Growth Slide 23 Kopane in the
market With production stabilising at or above 160kcts for FY08E
(+44% YoY), we believe the market will focus on the Main Pipe -
Definitive Feasibility Study (DFS) due in Q4/08. In the interim,
the wide diameter drilling programme should commence in February
and we expect regular progress reports throughout 2008. Jan 2008BUY
28p Kopane appears to be one of the cheapest diamonds stocks in the
diamond universe, trading at one of the lowest multiples to its
resource base in the diamond universe. A carat in the ground at
Kopane is valued at $2.26 compared with a range of $7.11-$52.11 for
other London-listed diamond producers and explorers. Dec 2007
Outperform 25p In July 2007 a management reshuffle led to the
appointment of the highly-rated Tim Read as executive chairman, and
the Finnish assets have been vended out to a JV with Mantle
Diamonds, a private UK company. Mantle will spend US$5m in
exploration and development of the assets and will pay 10m shares
to Kopane. This gives a look through value to the Finnish assets of
3.6m. Jan 2008BUY 38p Slide 24 The NPV of Liqhobong to Kopane
millions (Kopanes attributable 75% interest) 2530354045
601835527087 7032527393113 80477093116139 906188114140165
10076105134163192 11091123154186218 Grade of Main Pipe cpht Diamond
Value $/ carat Using a 10% discount rate, the modelled resource of
55 million tonnes and a production of 3.5 million tonnes of ore per
annum. Diamond prices are assumed to increase by 2% per annum in
real terms from 2008. Slide 25 Weighted Average : 5.28 Weighted
Average of companies with resources : 6.04 Slide 26 Summary
Strategic focus on Lesotho producing assets with growth potential
1M carats/year production objective - 2012 The PFS demonstrated the
robust economics of the Main Pipe project. The DFS is now underway
and due for completion end 2008. Grade, tonnage and bonanza stones
- potential upsides Considerable operational advantages New
management team plus proven in situ operational capacity Production
to date 254,000 carats current rate 160,000 carats/year Sales of
diamonds currently exceed 230,000 carats - value of $12.3M through
BHP Billiton JV partnership: Mantle Diamonds manage Finnish assets
Financing to take Kopane through to June 2009 Slide 27 Contacts
Details 43 North Audley Street Mayfair, London W1K 6WH Tel: 020
7529 7502 Fax: 020 7491 2244 [email protected]
www.kopanediamonds.com
