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Diamond Core Resources Diamond Core Resources Presentation by Presentation by Theo Bot Theo Botoula ulas s MD Dia D Diamond Core ond Core James Allan James Allan Joi oint advi nt advisor sor and capital raising

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SLIDE 1

James Allan & Associates

Diamond Core Resources Diamond Core Resources

Presentation by Presentation by Theo Bot Theo Botoula ulas – s – MD Dia D Diamond Core

  • nd Core

James Allan – James Allan – Joi

  • int advi

nt advisor sor and capital raising manager and capital raising manager

April 2006 April 2006

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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Contents Contents

  • Company info- share price, market value, shareholders
  • Diamond market
  • Diamond geology and exploration
  • Diamond Core projects
  • Samadi – background and projects
  • The merger
  • Capital raising
  • Summary
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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Directors Directors

  • Andre Louw – Chairman. Geologist and ex MD of Ocean

Diamond Mining and executive director Trans Hex Group

  • Theo Botoulas – MD. Mining Engineer. 16years mining

and asset management and financial industry experience

  • David Levithan – Attorney. 20 years mineral rights and

minerals law.

  • Shalom Nachom – Specialised diamond dealer 40 years

experience

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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Share price since Share price since relisting relisting

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James Allan & Associates

Diamond Core Diamond Core

Market Value Market Value

  • 100

100 200 300 400 500

On suspension October 2002 On re-listing March 2004 Current February 2006

R Millions

After the merger and capital raise

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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Shareholder profile Shareholder profile after merger and capital after merger and capital raising raising

  • I nstitutions 66%
  • RMBAM
  • Peregrine
  • Craton
  • Foord
  • Metam
  • Stanlib
  • Cadiz
  • Plus 2 international
  • I ndustry 16%
  • Private 18%
  • 294m shares in issue
  • 10% traded since 1 January
  • Prior to merger

institutional shareholder base > 50%

  • Capital raising R232m
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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Strategy Strategy

Organic growth Paardeberg Skeyfontein + Acquisitions Exploration Market Cap?? Samadi alluvials Other acquisitions? Market Cap R350m

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James Allan & Associates

Diamond market Diamond market

De Beers stocks have declined Polished prices have recovered

Sources: De Beers and polished prices.com

10 0 0 2 0 0 0 3 0 0 0 4 0 0 0 50 0 0 6 0 0 0

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James Allan & Associates

Graph of World Rough Diamond Production Graph of World Rough Diamond Production vs Demand vs Demand

Source: WWW International Source: WWW International

2 4 6 8 10 12 14 2005 2006 2007 2008 2009 2010 YEAR US$bn Demand Production

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James Allan & Associates

Demand for Rough Diamonds in Various Demand for Rough Diamonds in Various Size Categories Size Categories

Source: WWW International Source: WWW International

1 2 3 4 5 6 2005 2006 2007 2008 2009 2010 YEAR US$bn + 2 ct + 0.66 ct

  • 0.66 ct
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James Allan & Associates

Supply/demand deficit Supply/demand deficit

Source JA Presentation to World Diamond Conference Perth 2005 Source JA Presentation to World Diamond Conference Perth 2005

  • Demand grow

Demand growth to 2010 - th to 2010 - $4-5bn? $4-5bn?

  • Supply growth to 2010 -

Supply growth to 2010 - $1.5bn? 1.5bn?

  • Canada $950m (Snap Lake, Victor, Diavik, Jericho)

Canada $950m (Snap Lake, Victor, Diavik, Jericho)

  • Botswana $250m (Jwaneng, Orapa)

Botswana $250m (Jwaneng, Orapa)

  • South Africa $150m (Venetia)

South Africa $150m (Venetia)

  • Angola and other >$200m?

Angola and other >$200m?

  • Deficit –

Deficit – 15-17% of current supply>Prices 5-17% of current supply>Prices

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James Allan & Associates

Source JA Presentation to World Diamond Conference 2005

Market Deficit to 2010 Market Deficit to 2010

Market Growth (annual)

3% 4% 5% 6% 7%

0.5 1 1.5 2 2.5 3 3.5

B

  • t

s w a n a

James Allan & Associates

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James Allan & Associates

South African Mines South African Mines Production Split (2004) Production Split (2004)

Source:DBR Source:DBR Submission to Parliament 2005 Submission to Parliament 2005

$/carat

0-100 100-200 200-300 300-400 400-500 500-600 600-700 700-800 800-900 900-1000 1000-1100 1100-1200 1200-1300 1300-1400 1400-1500 1500-1600 1600-1700 1700-1800 1800-1900 1900-2000 2000

50 100 150 200 250 300 350 400 450 500

$900m “non-cuttable In SA” $400m “cuttable In SA”

Total Value $m

Samadi Alluvials Paardeberg

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James Allan & Associates

Rough Diamond Price I ncreases Since 2002 Rough Diamond Price I ncreases Since 2002

SourceJA SourceJA Presentation to World Diamond Conference Perth 2005 Presentation to World Diamond Conference Perth 2005

10 20 30 40 50 60 70 80

Middle Orange River Market Average Indian Goods

Percent

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James Allan & Associates

Diamond exploration process Diamond exploration process

  • The importance of being “on craton”
  • Locate your target area
  • Regional geology-geophysics
  • Soil sampling> jigging> picking> chemical probe analysis
  • I dentify targets
  • Drilling
  • Bulk sampling
  • Pre-feasibility and feasibility studies
  • Mining
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James Allan & Associates

The importance of being The importance of being “ “on

  • n craton

craton” ”

Figure 6. The model for diamond formation and transport to surface is quite simple. Diamonds form in the relatively cooler conditions underneath thick cratonic crust and have to be transported to surface quickly before they resorb at lower pressures closer to the earths surface.

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James Allan & Associates

The importance of being The importance of being “ “on

  • n craton

craton” ”

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James Allan & Associates

Diamond Core Resources projects Diamond Core Resources projects

Paardeberg Paardeberg East East

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James Allan & Associates

Diamond Core Resources projects Diamond Core Resources projects

Paardeberg Paardeberg East East

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James Allan & Associates

Diamond Core Resources projects Diamond Core Resources projects

Paardeberg Paardeberg East East

  • SAMREC code requirements
  • Geologists signed off Paardeberg inferred ore resource

statement in terms of the SAMREC code

  • Facts: 200 000 tons processed and 19 000 carats recovered
  • Management assumes a base grade 9.5 cpht
  • Management estimates the in situ grade to be higher
  • Historical $100 per carat
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James Allan & Associates

Diamond Core Resources projects Diamond Core Resources projects

Skeyfontein Skeyfontein

  • Background
  • Model BEE deal – lauded by Northern Cape DME
  • Prospecting right PR 01/ 2005 NC granted and issued
  • Current exploration programme
  • Way forward
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James Allan & Associates

Diamond Core Resources projects Diamond Core Resources projects

Skeyfontein Skeyfontein

Figure 11. The Skeyfontein project area is a large piece of ground in a known diamondiferous kimberlite field.

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James Allan & Associates

Diamond Core Resources projects Diamond Core Resources projects

Skeyfontein Skeyfontein – – Stream Sediment Sampling Stream Sediment Sampling

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James Allan & Associates

Background to Samadi Background to Samadi

  • Company formed in period when Diamond Core

Resources suspended (Oct 2002) and under threat of liquidation order

  • Shalom Nachom owns 24% of Samadi and 17% of

Diamond Core

  • Specific strategy to pursue alluvial projects along the

Middle Orange River

  • Common directors : Shalom Nachom, David Levithan,

Theo Botoulas

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James Allan & Associates

Samadi Samadi

Alluvial properties Alluvial properties

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James Allan & Associates

Samadi and Diamond Core Samadi and Diamond Core’ ’s s alluvial properties alluvial properties

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James Allan & Associates

Why the Middle Orange River? Why the Middle Orange River?

  • Large diamonds : Average size> 2.5cts> $1500/ ct
  • Geology of the Middle Orange forms meanders and

alluvial terraces

  • Rooikoppies have been successfully mined
  • Calcrete layer could not be penetrated
  • Basal gravels carry diamonds
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James Allan & Associates

Gravel Profile Gravel Profile

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James Allan & Associates

Size : frequency distribution Size : frequency distribution MIDDLE ORANGE RIVER MIDDLE ORANGE RIVER (courtesy James

(courtesy James Allan) Allan)

1 10 20 30 50 90 98 99.99 0.01 0.1 1 10 100 200 300 0.01

Percent carats larger than Z

Diamond distribution of Saxendrift

Mining & exploration Statistically inadequate to be used in the plot Carats per stone James Allan & Associates

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James Allan & Associates

Size : frequency distribution Size : frequency distribution

  • 90% of stones are above 1 carat
  • > 30% of stones are above 10 carats
  • Approximately 3% of stones are above 100 carats

The area is known for recovery of large, good quality stones

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James Allan & Associates

Comparable mine Comparable mine

Saxendrift Saxendrift (Trans Hex) (Trans Hex)

  • Listed as GEM in 1998
  • Bought by Mvela and reversed into Trans Hex in May 2000 for

R75m

  • Large diamonds - $1 200/ ct
  • 18 600 carats in 2004> $22m revenue
  • Contribution to Trans Hex estimated at R400m to March 2005
  • PAT estimated at R275m to March 2005
  • Above data from James Allan’s analysis
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James Allan & Associates

Samadi Samadi’ ’s projects s projects

  • Uitdraai: Drilled and modelled. Mine planning done by Hatch,

CDM the plant design. 15Mt Resource

  • Silverstreams: Drilled and modelled. Mine planning done by

Hatch, plant design by CDM. 35Mt Resource

  • De Kalk: First diamond discovery on De Kalk. Drilling
  • underway. 1500ha terrace
  • All the gravels are diamondiferous. Regional grade 0.3 cpht to

1.5 cpht

  • Geology of Silverstreams and Uitdraai similar to Saxendrift
  • Combined resource similar to GEM
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James Allan & Associates

Samadi Samadi’ ’s s projects projects

Silverstreams Silverstreams

  • Three terraces with 35Mt
  • Diamonds recovered over a three month period include

65.8, 50.1, 28.8, 13.17 and 12.13 carat stones, with an average stone size of 3.5 carats, and an average price of US $2 500 per carat

  • Grade 0.5cpht?
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James Allan & Associates

Silverstreams Silverstreams

Exploration Exploration

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James Allan & Associates

Samadi Samadi’ ’s s projects projects

Uitdraai Uitdraai

  • The Uitdraai terrace is of slightly lower elevation

than the Saxendrift terrace

  • The deposit is approximately the same size as

Saxendrift (15Mt)

  • Unworked Rooikoppie gravels
  • Grade > 0.5 cpht ?
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James Allan & Associates

Uitdraai Uitdraai terraces terraces

(North/ Central/ South) (North/ Central/ South)

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James Allan & Associates

Samadi Samadi’ ’s s projects projects

De Kalk De Kalk

  • First diamond discovered in South Africa in 1863 on De Kalk
  • 2 000 ha for prospecting> 1500 ha gravel mapped
  • I nitial drilling shows 5m of gravel> 160Mt?
  • History of large stones discovered
  • Drilling programme underway – indicates 5m gravels
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James Allan & Associates

De De Kalk Kalk terrace terrace

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James Allan & Associates

Samadi BEE Samadi BEE

  • Sefalana Consortium 50% equity
  • Right to raise capital expired 31 December 2005
  • Samadi provides all the capital
  • Return of prime plus 5% on capital
  • After repayment of capital 85:15 split on profit
  • After two years Sefalana can buy back 11% profit at NPV

less 15% discount> 74:26 split on profit

  • Samadi does all the marketing for 5% of revenue
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James Allan & Associates

Diamond Core/ Samadi merger Diamond Core/ Samadi merger

  • Three common directors recused from the process
  • Andre Louw (Chairman of Diamond Core Resources) and

QuestCo (advisor to Diamond Core Resources) to run the process

  • River – independent advisor to Samadi
  • Competent person appointed for Samadi and Diamond

Core Resources

  • One technical report with both valuations
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James Allan & Associates

Diamond Core/ Samadi Merger Diamond Core/ Samadi Merger and Capital Raising and Capital Raising

  • CPR DCF on Silverstreams R57m (21.8% nominal) plus R22m

marketing

  • Diamond Core to Samadi ratio 1:1.85
  • Exchange ratio 1:0.84
  • 273m shares to be issued by Diamond Core upon authorisation

by shareholders

  • 273m shares to be issued on a profit target of R35m
  • 50m options for the loan account
  • Favourable for Diamond Core > 2 times multiple
  • Ten for one consolidation (for US and Canadian reasons)
  • Capital raising R200m
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James Allan & Associates

Diamond Core Diamond Core Corporate activities Corporate activities

  • Shareholders meeting 27 Feb
  • Approved 10 for 1 consolidation
  • Approved merger terms with Samadi
  • Approved issue of shares for cash
  • Up to 230m shares can be issued
  • Subject to fair and reasonable from EY
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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Capital Required Capital Required Rm Rm

Silverstreams Silverstreams

60 60

Uitdraai Uitdraai

60 60

Paardeberg Paardeberg

45 45

Exploration inc Skeyfontein Exploration inc Skeyfontein

20 20

Unallocated costs Unallocated costs

15 15

Total Total

200 200

60% is for plant and equipment 60% is for plant and equipment

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James Allan & Associates

Diamond Core Capital Raising Diamond Core Capital Raising-

  • Silverstreams

Silverstreams and and Uitdraai Uitdraai alluvial projects alluvial projects

  • 150 tph exploration plants
  • 1m tpa capacity
  • > 5 000 carats p.a. each
  • > $7.5m revenue each
  • Costs R20-25 / tonne
  • Prove up grade and value and then decide on mining plant
  • 300 tph at Uitdraai ?
  • 500 tph at Silverstreams ?
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James Allan & Associates

Diamond Core Diamond Core

Capital Raising Capital Raising-

  • Paardeberg

Paardeberg East East

  • 50 tph exploration plant
  • 300 ktpa capacity
  • > 40 000 carats
  • > $5.25m revenue
  • Costs R40-50/ tonne
  • Prove grade and value and then decide on mining plant
  • 100 tph plant?
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James Allan & Associates

Diamond Core Diamond Core

Project Summary Project Summary-

  • estimates

estimates

* Non SAMREC, # Exploration plant * Non SAMREC, # Exploration plant

Project Project Re Reso sour urce Contai Containe ned d carat carats Contai Containe ned d Value $m Value $m Product Production

  • n

(carats)# (carats)# Product Production

  • n

(value) $ (value) $m p.a p.a #

Silv Silverstre reams

35Mt 35Mt 175 000 175 000 262 262 5 000 5 000 7.50 7.50

Uitd Uitdraai raai

15Mt* 15Mt* 75 000 75 000 112 112 5 000 5 000 7.50 7.50

De De K Kalk lk

40- 40- 160Mt* 160Mt* >200 000 >200 000 >300 >300 5 000 5 000 7.50 7.50

Paardeberg Paardeberg

7Mt* 7Mt* 910 000 910 000 122 122 39 000 39 000 5.25 5.25

Budgeted Exploration production Silverstreams 5 000 cts Uitdraai 5 000 cts Paardeberg East 40 000 cts Total Value $22m

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James Allan & Associates

Diamond Core Diamond Core

Capital Raising Capital Raising

  • Capital could have been raised quickly from the diamond

industry but a decision made to got the instiututional route

  • Oversubscribed before going off shore
  • Very good support from SA institutions
  • High degree of interest from off shore
  • US and Canadian institutions could not participate but

“very interested”

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James Allan & Associates

Diamond Core Resources Diamond Core Resources

Project profile in the d Project profile in the diamond exploration process

iamond exploration process

  • The importance of being “on craton”
  • Locate your target area
  • Regional geology-geophysics
  • Soil sampling> jigging> picking> chemical probe analysis
  • I dentify targets
  • Drilling
  • Bulk sampling
  • Pre-feasibility and feasibility studies
  • Mining

De Kalk Skeyfonetin Silverstreams Uitdraai Paardeberg

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James Allan & Associates

Summary Summary

No longer a No longer a “ “one

  • ne-
  • trick pony

trick pony” ”

  • Diamond Core Resources will have a suite of five projects
  • Three cash generative alluvial projects- large gravel resource
  • Two kimberlite projects- one close to production
  • Large, good quality diamonds from Middle Orange River> above

average growth

  • Samadi merger provides critical mass – base for further growth
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James Allan & Associates

Disclaimer Disclaimer

  • This presentation is confidential and may not be reproduced in whole or in part

without our permission

  • I nformation contained herein reflects management’s opinions and is not

guaranteed for accuracy, completeness or otherwise

  • No information contained herein should be construed as a solicitation for the

purchase or sale of the security

  • The security mentioned involved a high degree of risk
  • The recipient must make their own independent decision regarding any

purchase or sale of the security

  • James Allan and Associates (Pty) Ltd (“James Allan”) is Joint Corporate Advisor

to Diamond Core Resources

  • James Allan and its employees may from time to time own the security

mentioned

  • James Allan is being issued shares in lieu of 50% of the fee