Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — IPO Roadshow (February 2007)
38 slides from Gem Diamonds's IPO roadshow presentation, February 2007
Slide 1: Investor presentation
Investor presentation February 2007 This document is an advertisement and not a prospectus and investors should not subscribe for or purchase any shares referred to in this document except on the basis of information in the prospectus to be published by the Company in due course in connection with A
Slide 2: Disclaimer
Disclaimer This document, which is personal to the recipient and has been issued by Gem Diamonds Limited (the “Company”), comprises the written materials/slides for a presentation concerning the proposed admission to the Official List of the Financial Services Authority and to trading on the London
Slide 3: Gem Diamonds: A unique and leading diamond company
Gem Diamonds: A unique and leading diamond company Diamond mining expertise and experience of management of over 150 years Long life high quality DRC & CAR producing kimberlite development projects: mine “alluvial hotspots” Balanced portfolio of assets, projects & Kimberlite potential prospects Attr
Slide 4: Indicative transaction summary
Indicative transaction summary Issue/ticker Gem Diamonds Limited/GEMD Offer Primary: upto 20m shares Secondary: 1m shares (management) Price range 820p – 970p (US$16 – US$19) per share Listing Main Board of the LSE Offer structure Global offering to institutional investors (excluding South African r
Slide 5: Indicative timing of the offering
Indicative timing of the offering 25 January 2007 Intention to float announced and pre-deal research published Investor education commenced 02 February 2007 Management roadshow commences Bookbuilding starts 06-08 February 2007 Indaba mining conference Management roadshow and meetings at Indaba 13 Fe
Slide 6: Introduction to the team
Introduction to the team Clifford Elphick Kevin Burford Chief Executive Officer Chief Financial Officer Executive Director Executive Director Age: 46 Age: 48 ! Joined Anglo American Corporate and International Finance Division 1986 ! Over 20 years experience in diamond mining ! Seconded to be Harry
Slide 7: Introduction to the team (cont.)
Introduction to the team (cont.) Glenn Turner Peter Heap Chief Commercial and Legal Officer Operations Manager Age: 46 Age: 57 ! Called to the Johannesburg Bar in 1987 where he spent 14 years practising as an ! Peter has 34 years’ experience in the mining industry in various exploration, geological,
Slide 8: Agenda
Agenda ! Section 1 Group overview and positioning Page 08 ! Section 2 Operational/exploration review Page 12 ! Section 3 Financials & Other information Page 29 Appendices Page 33 8
Slide 9: Brief snapshot of Gem Diamonds
North Brief snapshot of Gem Diamonds Asset Country Status Ownership Description Production Letšeng Lesotho Production 70% Long life producing kimberlite diamond mine Projects Mbelenge DRC Development 49.99% 4 mining permits covering 91km2 Lubembe DRC Exploration 49.99-100% 2 petite mining permits, 8
Slide 10: Positioning the Group
South Positioning the Group Mambéré Mbelenge Tshikapa Lubembe Chiri1 Longatshimo Letšeng Concepts Deposits Resources Reserves Production Increasing Bankabilty Portfolio highlights ! Balanced portfolio of a producing asset, development projects and long-term prospective deposits – Long-life producing
Slide 11: Diamond industry overview
Diamond industry overview Supply Demand World diamond production by country, forecast to 2010 Industry supply¹ vs demand² (2005—2015) Demand for rough diamonds 2006 (Indexed to 1.00) (At polished diamond wholesale prices) (US$bn) Botswana Russia Canada S.Africa Angola (Indexed Production Sales Japan
Slide 12: Agenda
Agenda ! Section 1 Group overview and positioning Page 08 ! Section 2 Operational overview Page 12 ! Section 3 Financials & Other information Page 29 Appendices Page 33 12
Slide 13: Country operation overview: Lesotho
Lesotho DRC CAR Other Country operation overview: Lesotho Letšeng ! Mountainous kingdom landlocked within South Africa with constitutional monarchy ! The Lesotho Mines and Minerals Act 2005 regulates the prospecting for and mining of minerals ! Under the Mines and Minerals Act companies in Lesotho a
Slide 14: History of the Letšeng mine
Lesotho DRC CAR Other History of the Letšeng mine 1960 — 1982 ! Discovery 1957 by Peter Nixon, worked by artisanal miners until 1968 ! 601 carat Lesotho Brown ! Operated by De Beers from 1973 – 1982 ! Closure – 1982 – downturn in diamond market 1995 — June 2006 ! Letšeng Diamonds (Pty) Ltd. was inco
Slide 15: Reserves and resources
Lesotho DRC CAR Other Reserves and resources Depth from Depth to Resource Volume SG Recove. Value Min cut off Source (m) (m) type (m³) (kg/m³) Tonnage Grade (cpht) CTS (US$/ct) (mm)¹ Satellite pipe 0 182 Indicated 5,059,940 2.58 13,054,000 1.98 258,000 1,570 2.00 182 475 Inferred 11,086,094 2.58 28,
Slide 16: Process overview and production forecast
Lesotho DRC CAR Other Process overview and production forecast ! Satellite Pipe mined using traditional drill, blast, load and haul open-pit techniques ! Haul rate from mine to DMS plant; stock piles or waste at steady 350tph ! Pre-crushing facility has capacity of 800tph ! Sorthouse operated by Let
Slide 17: Gem Diamonds' ownership of Letšeng and the future
Lesotho DRC CAR Other Gem Diamonds’ ownership of Letšeng and the future ! July 2006: Gem Diamonds purchased effective 70% of Letšeng Diamonds (Pty) Ltd., begun integration with existing management – July: production record – 264.6 kt (mined) and 4,784 ct – August: recovered 603 ct Lesotho Promise –
Slide 18: Country operation overview: DRC
Lesotho DRC CAR Other Country operation overview: DRC DRC Projects ! Elections successfully completed 2006 ! Mining Code came into effect in July 2002 (supplemented by the Mining Regulations in March 2003), protects the interests of both mining companies and the State ! Code also includes regulation
Slide 19: Project overview
Lesotho DRC CAR Other Project overview Locality Plan of DRC Diamond Projects Four main exploration and development projects situated near the Kasai river Inferred Diamond Resources for DRC Alluvial Deposits (at 01 Oct 06) Average diamond Project Gross in-situ contained diamonds (000 ct) value (US$/c
Slide 20: Current status of main DRC projects
Lesotho DRC CAR Other Current status of main DRC projects All projects Mbelenge project Lubembe project Longatshimo project ! All concessions, except Mbelenge, Status: Development Status: Exploration Status: Exploration located in “diamond triangle” Ownership: 49.99% Ownership: 49.99-100% Ownership:
Slide 21: Future development and long term prospects
Lesotho DRC CAR Other Future development and long term prospects Mbelenge project Lubembe project Longatshimo project ! Delineation of extensive terrace and flood plain ! Interpretation of geophysical anomalies ! Continue with current small sample prospecting deposits programme to mid 2007 ! Follow
Slide 22: Kimberlite potential in Tshikapa's "diamond triangle"
Lesotho DRC CAR Other Kimberlite potential in Tshikapa’s “diamond triangle” ! Aerial geophysical surveys over Longatshimo and Lubembe project areas indicate: – 30 targets in Longatshimo – 17 from 2005 Lubembe survey – awaiting interpretation results of 2006 survey ! Field mapping indicates low energ
Slide 23: Country operation overview: CAR
Lesotho DRC CAR Other Country operation overview: CAR Mambéré Project ! Former French colony gained independence in 1958 ! CAR mining code allows mining permit holders benefit for 3 years from the following exemptions during exploration and production: – Corporate tax – Social development tax – 50%
Slide 24: Mambéré River project
Lesotho DRC CAR Other Mambéré River project The Mambéré River: Le Buckle Loop – focus of current exploration programme ! Alluvial project on Mambéré River Conceptual Deposit level – – 80km of river with a 5km strip on each bank representing 13.5million cts Libozo Area approximately 855km² 283,300 ct
Slide 25: Current status, future developments and long term prospects
Lesotho DRC CAR Other Current status, future developments and long term prospects Current Status Expected steps to developing CAR production ! In possession of an exploration and mining licence ! Bulk sample plant to be erected and commissioned in March 2007 ! Board members and management team appoi
Slide 26: Angola: Chiri Concession
Lesotho DRC CAR Other Angola: Chiri Concession " The Group signed on 10 January 2007 a conditional Cooperation Agreement with an option to acquire an interest in the Chiri Concession in Angola " Sets terms on which the Group will conduct a feasibility study to assess the commercial viability of what
Slide 27: Other opportunities
Lesotho DRC CAR Other Other opportunities ! The Group is reviewing other possible alluvial and kimberlite acquisition opportunities they believe have significant potential in: – Angola (kimberlites and alluvials) – Botswana (kimberlites) – South Africa (kimberlites and alluvials) – Zambia (kimberlit
Slide 28: Reasons for IPO
Reasons for IPO Why IPO? Future development plans ! US$110m: Bring selected development projects in the CAR and DRC into production ! Key tool for growth – Focus on more advanced projects – Cash to fund main projects in the pipeline – Proceeds allocated to meet the capital and operating expenditures
Slide 29: Agenda
Agenda ! Section 1 Group overview and positioning Page 08 ! Section 2 Operational/exploration review Page 12 ! Section 3 Financial & Other information Page 29 Appendices Page 33 29
Slide 30: Selected financial information
Selected financial information ! Tax – Group is UK tax resident and will pay UK corporation tax on profits ! Risk management – Group will, where appropriate, put in place short term hedging arrangements covering some of its US$/ZAR exposure where the results of tenders are known or can be reasonably
Slide 31: Events impacting structure and share capital
Events impacting structure and share capital Private placement Ownership Overview ! 2006 private placement was covered by two identical subscription agreements ! Pre IPO Current Institutional Shareholders: raising a total of US$158m Others ! BlackRock (MLIM) ! Investors obliged to subscribe pro-rata
Slide 32: Questions
Questions 32
Slide 33: Agenda
Agenda ! Section 1 Group overview and positioning Page 08 ! Section 2 Operational/exploration review Page 12 ! Section 3 Financials & Other information Page 29 Appendices Page 33 33
Slide 34: Appendix: Board structure
Appendix: Board structure Board of Directors Executive Directors ! Appointments of all Executive Directors and Senior Management confirmed Clifford Elphick Executive Chairman and Chief ! Role of Chairman and Chief Executive expected to be split within 12 months Executive Officer of IPO and a new Cha
Slide 35: Appendix: Non-executive directors
Appendix: Non-executive directors Roger Davis Gavin Beevers Senior Non-Executive Director Non-Executive Director Age: 50 Age: 56 ! Eight years at Barclays, latterly as the CEO of the 45,000 strong UK banking operation ! Director – Operations of De Beers since April 2000 and as a member of the Board
Slide 36: Appendix: Other senior management
Appendix: Other senior management Nick Selby John Ward Metallurgical Manager Exploration Manager Age: 51 Age: 51 ! Nick spent 19 years with De Beers and has experience on various operations – ! John served as Exploration Manager at Namdeb Corporation for five years Oranjemund, Cullinan Mine and Vene
Slide 37: Appendix: Health, safety, environment and CSR
Appendix: Health, safety, environment and CSR ! Health, Safety, Social and Environmental “HSSE” Committee – The committee intends to meet four times a year – Expect regular attendance of appropriate technical specialists – Will sign off Group policy and review of progress – Expect regular reviews of
Slide 38: Appendix: Evolution of Gem Diamonds
Appendix: Evolution of Gem Diamonds Signing of mining convention for Mambéré and Conditional Cooperation Agreement grant of prospecting and mining licences on Chiri Concession agreed Selection of experienced team and identification of diamond Acquisition of 49.9% of KDC Recovery of Lesotho Promise –