RBC Diamond Conference 2010 London: 16 th April Toronto: 20 th April - - PowerPoint PPT Presentation

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RBC Diamond Conference 2010 London: 16 th April Toronto: 20 th April - - PowerPoint PPT Presentation

RBC Diamond Conference 2010 London: 16 th April Toronto: 20 th April Toronto: 20 April 1 Disclaimer The following presentations are being made only to, and are only directed at, persons to whom such presentations may lawfully be


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SLIDE 1

RBC Diamond Conference 2010 London: 16th April Toronto: 20th April

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Toronto: 20 April

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SLIDE 2

Disclaimer

  • The following presentations are being made only to, and are only directed at, persons to whom such presentations may lawfully be

communicated (“ relevant persons” ) Any person who is not a relevant person should not act or rely on these presentations or any of communicated (“ relevant persons” ). Any person who is not a relevant person should not act or rely on these presentations or any of their contents.

  • Information in the following presentations relating to the price at which relevant investments have been bought or sold in the past or

the yield on such investments cannot be relied upon as a guide to the future performance of such investments. These presentations do not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for

  • r otherwise acquire securities in any company within the Group.
  • The presentation may contain forward-looking statements which are subj ect to risks and uncertainties because they relate to future
  • events. These forward-looking statements include, without limitation, statements in relation to the Group’ s proj ected financial results

for the 2010 financial year. S

  • me of the factors which may cause act ual results to differ from these forward-looking statements are

discussed in certain slides of the presentation and others can be found by referring to the information contained under the heading “ Key Group risks 2009” in “ The Chief Financial Officer’ s review” in our Annual Report for the financial year ended 2009. The Half-Year Financial Report and Annual Report can be found on our website (www.gemdiamonds.com).

  • The presentations also contain certain non-IFRS financial information. The Group’ s management believes these measures provide

valuable additional information in understanding the performance of the Group or the Group’ s businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group’ s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies.

  • Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as

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y, g p g , y replacements for or alternatives to, but rather as complementary to, the comparable IFRS measures such as revenue and other items reported in the consolidated financial statements.

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SLIDE 3

Gem Diamonds Gem Diamonds

  • Gem Diamonds

– Focused on higher value diamonds

  • In 2009 diamond prices at Letšeng averaged US

$1 534/ ct p g g $

  • In 2009 diamond prices for Ellendale’ s fancy yellow diamonds averaged

US $2 480/ ct

  • S

afety is a main priority and in March 2010 Gem achieved 1.7 million man hours worked since the last LTI in November 2009 worked since the last LTI in November 2009

  • Gem Diamonds maintained profitability during the worst recession faced by the

diamond industry

  • Cost reductions were driven across the group in 2009 resulting in central costs

falling some 40 percent

  • Operating efficiencies were enhanced across operating mines
  • 2009 attributable profit of US

$15.5 million

  • Gross cash of US

$113 8 million at Dec 31 2009 and no debt

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  • Gross cash of US

$113.8 million at Dec 31 2009 and no debt

  • Gem Diamonds focusing on internal and external growth opportunities
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SLIDE 4

Diamond prices 2010— per quarter average

Letšeng ROM (adj ) Ellendale ROM (excl Tiffany yellows) Ellendale Tiffany yellow production (excl Tiffany yellows) production

2,571 2,139

(US$ per ct)

119 102 110 142

(US$ per ct)

2,708 2,414 2,428 2,500 2,545 2,616

(US$ per ct)

1,496 1,709 1,893 1,753 1,017 86 36 102 38 2,159 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

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Of the two sales so far in April 2010:- Letšeng has achieved an average price of US $1977 per carat and Ellendale has achieved an average price of US $2550 per carat for the sales of yellow diamonds to Tiffany.

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SLIDE 5

20,000

Main producers of +25¢ rough diamonds

15,000 ct

Gem Diamonds Alrosa

5 000 10,000 US$ per c

Rockwell De Beers Endiama BHP S A

5,000 25 30 35 40 45 50 55

Petra DRC S A TransHex

Ave stone size (ct)

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S ize of bubble = relative value S

  • urce: BB Diamond S

ervices

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SLIDE 6

š Letšeng's market share of +25¢ elite goods

S L k

By mine… …

  • r by company

Snap Lake Baken Finsch Letlhakane Orapa Venezuela Koffiefontein S.Af. Remainder Rockwell TransHex SA BHP-B

$

Ekati DRC Victor Cullinan Catoca Venetia Nyurba Aikhal DRC Petra Endiama B

At $84m we estimate Letšeng's market share of +25¢ Elite goods to be 31%

$0m $20m $40m $60m $80m $100m Aikhal Angola (ex Catoca) Jwaneng Udachny Mimy Letseng $0m $20m $40m $60m $80m $100m De Beers Alrosa Gem

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$ $ $ $ $ $ $0m $20m $40m $60m $80m $100m

S

  • urce: BB Diamond S

ervices Note: Accounts for +/ - 95%

  • f +25¢ production
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SLIDE 7

š Letšeng, Lesotho

N

  • In 2009 Letšeng produced over 700

rough diamonds larger than 10.8 carats – 78%

  • f revenue
  • 2009 strategy aimed at profitability
  • 2009 strategy aimed at profitability

and cash flow generation in recession

S atellite Pipe 5ha Main Pipe 17ha

  • 2009 EBITDA US

$58.5m

  • 2009 cash cost per tonne of $10.80 (2008 – $11.69)
  • 2010 organic growth workstreams
  • 2010 August: current marketing contract ends
  • 2010 focused sales opportunities including beneficiation

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SLIDE 8

Examples of internal operational opportunities p p pp

High Pressure Grinding Rolls

  • Increased effective gap width.
  • Increased production of fines.

Debottlenecking of downstream processes

  • Debottlenecking of downstream processes.
  • Applications in secondary and tertiary crushing, specifically Letšeng.

In Line Pressure Jigs

  • Less precise cut point (Tromp curve) than DMS

. R d d ti g t ( d F S i)

  • Reduced operating costs (power and FeS

i).

  • Reduce operating cut-off grades for fine material.
  • Application in pre-concentrating DMS

feed, specifically Letšeng.

High volume X-Ray machines

100 t h @ 50 20 t i l it

  • 100 tph @
  • 50 + 20 mm material per unit.
  • Replacement of DMS

.

  • Reduced power and FeS

i costs.

  • Application: initial replacement of fines DMS

at Letšeng.

Autogenous Milling

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Autogenous Milling

  • High capacity, low cost, simple process.
  • Early liberation.
  • Increased fines generation.
  • Potential application on new proj ects.
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SLIDE 9

Letšeng: Understanding the resource

Satellite Pipe

  • NVK:

– Grade 1.81 cpht – Revenue $2100/ carat

Letšeng: Understanding the resource

S atellite Pipe Main Pipe

Revenue $2100/ carat

  • SVK

– Grade 2.29 cpht – Revenue $1800/ carat

Main Pipe

K4 KNorth K6 NVK SVK

  • K North

– Grade 1.45 cpht – Revenue $1800/ carat

  • K6

Grade 2 51 cpht KSouth – Grade 2.51 cpht – Revenue $1100/ carat

  • K South

– Grade 1.13 cpht – Revenue $1900/ carat

  • K4

– Grade 0.96 cpht – Revenue $1100/ carat

* Revenue figures are for illustrative purposes only

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De Beers Stockpile

– Grade 0.7cpht – Revenue $1100/ carat

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SLIDE 10

Ellendale, Australia

  • 2009 production measures and targets achieved or

p g exceeded

  • Maj or supplier of rare fancy yellow diamonds
  • 2009 average price for total Ellendale production

hi d US $232/ t achieved US $232/ ct

  • 2009 EBITDA US

$11.0 million

  • Continued focus on cost reduction:

2009 cash cost per tonne U$13 82 (U$14 16 2008)

  • 2009 cash cost per tonne U$13.82 (U$14.16 – 2008)
  • S

upply agreement concluded with Tiffany – Tiffany launch Ellendale yellow diamond range First price review in S eptember 2010

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– First price review in S eptember 2010

  • Exploring expansion opportunities
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SLIDE 11

Other internal opportunities

  • Gope:

– Ongoing resource evaluation – Mining licence negotiations to be continued in 2010

  • Chiri: Ongoing evaluation for development
  • Cempaka: Evaluating options
  • DRC: Alluvial assets sold but a 65%

automatic interest

An 0.48 carat Type IIb rare blue diamond recovered from sampling in Gope in Botswana

DRC: Alluvial assets sold but a 65% automatic interest maintained in any economic kimberlites

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SLIDE 12

Outlook and strategy

  • Encouraging supply / demand fundamentals
  • Organic growth workstreams
  • External growth opportunities
  • Review of marketing strategy
  • Continuation of beneficiation initiatives

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SLIDE 13

S hare Information

Major Shareholders 15 March 2010 Capital Group Companies 15.31%

S hare Information

S hare price and trading volumes

350 3,500

Share price (p) Volume (000s) Capital Group Companies 15.31% Lansdowne Partners Ltd 12.34% Blackrock Inc 11.74% Graff Diamonds International Ltd 10.27% Gem Diamond Holdings Ltd (held in trust 6 74%

150 200 250 300 1 500 2,000 2,500 3,000

Gem Diamond Holdings Ltd (held in trust for Clifford Elphick) 6.74% Mirabaud Investment Management 4.98% Legal & General 4.13%

50 100 150 9 9 9 9 9 9 9 9 9 500 1,000 1,500

Other Director’ s holdings (not including Clifford Elphick) 2.25% Company Officers Clifford Elphick Chief Executive Officer

J a n

  • 09

F eb

  • 09

A p r-09 M a y-09 J u n

  • 09

A u g

  • 09

S ep

  • 09

N

  • v
  • 09

D ec

  • 09

F eb

  • 10

M a r-10

p Glenn Turner Legal and Commercial Officer Kevin Burford Chief Financial Officer Alan Ashworth Chief Operations Officer

Gem Diamonds Ltd is listed on the Main Board of the London Stock Exchange and is a member of the FTSE 250 Index

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Richard Chetwode Head of Investor Relations

S hares in Issue 138,267,181 S hare price (14th April 2010) £2.90 Market Capitalisation £400.5 million