Portfolio Committee Briefing 26 October 2005

1. Portfolio Committee Briefing 26 October 2005

2. Content • Company Background • Overview of Operations • Financial and Production Review • Mine Production Challenges • Short-term Production Improvement Plans • Health and Safety Statistics • Possible Opportunities for Growth • Social Responsibility and Investment • Uncertainties & Litigation Issues • Conclusion

3. Core Business: Diamond Mining through ABM

4. Non-Core Business: Agricultural and Tourism through ABT

5. Other Assets Under Management

6. Location of Operations

7. Financial & Production Review

8. Financial & Production Review Consolidated Results (R’000)

9. Financial & Production Review

10. Financial & Production Review

11. Financial & Production Review In Summary: • Total revenue was R152.4m compared to R264.7m in 2004. • Diamond production income decreased from R182.5 million to R143.9 million. • Diamond production down 38% • Operating costs decreased by 32% • Total operating loss was R 0.9 million • ABT operating loss increased from R0.084m to R5.5m • Price per carat up 15% (US$), whereas the ave. R/$ rate was 6.04 vs. 6.80 in 2004 • Capex up 43% to R17.71 million with main expenditure of R13.53m on replacement of equipment • Exploration reduced by 69% to R4.18m

12. Revenue Split (Total R152,4 million) Financial & Production Review

13. Financial & Production Review Carat Production 2005 (49 577 carats)

14. Financial & Production Review Net profit/(loss)

15. Better diamond prices achieved Financial & Production Review

16. Financial & Production Review Net operating expenses under control

17. Financial & Production Review Available Cash as at 31 March 2005 (R42,7m)

18. Financial & Production Review Persistent strengthening of the Rand

19. Production and Other Challenges

20. Major Difficulties: • Mining a mineral resource that is not well defined • Huge replacement Capex programme required • Extensive exploration on land is necessary • Current marine mining methods often hampered by poor sea weather • Financial provisions for both long-term & other liabilities • Rehabilitation liability • Provision for post retirement medical aid • Other unforeseen expenses related to legal matters • Main constraint is the lack of funding ability for Capex and exploration

21. Areas that Attributed to Production Shortfall: Against Approved Production Budget for 2005

22. Declining Carat Production

23. Company currently under-capitalised

24. Inconsistent Exploration programme

25. Continuous Downward Trend on Sea Days

26. Unpredictability of the number of sea days: 2005

27. Short-term production improvement plans: • Implementation of double shift work on land mining • Involvement of labour in production planning sessions • Implementation of remote mining techniques • Place emphasis on cost reduction and control • Market development for ABT products

28. Safety and Health

29. Safety and Health Statistics: • The N.C opencast mines LTI average is 0.99 • Higher rates for Alexkor as a result of extensive diving operation in comparison to peers • No fatality for the period under review • Awarded the DME 1000 FFPS in April 2005

30. Possible Growth Opportunities

31. Possible Growth Opportunities • Acquisition of mineral rights in other parts of the country • Restart mining operations at Muisvlak • Embark on an extensive exploration programme • Recapitilise current land mining • Replacement of current mining equipment Constraint: Lack of funding capacity

32. Social Responsibility & Investment

33. Social Responsibility and Investment:

34. Social Responsibility and InvestmentSkills Development: • Five out of ten current bursary holders are females • Seven out of 11 HDSA employees in mentorship programme are females • Three out of 10 HDSA apprentices are females • Trained 3 females as heavy earthmoving machine operators • ABET classes to improve literacy, numeracy and life skills of employees and community • Alexkor expended 3.14% of total wage bill in 2005 on training

35. CAT 769 Dump Truck – Operated by a Lady

36. Social Responsibility and InvestmentCommunity Support: • Providing Health Care and emergency services to Alexander Bay and Richtersveld Communities • Maintenance of Alexander Bay town. • Providing portable water to A/Bay and Port Nolloth • Ad-hoc donations & rental subsidies of R11 million for period 2000-2005 • Involvement in HIV/Aids awareness projects

37. Employment Equity, as at 30 September 2005 Total workforce = 6% African, 73% Coloured, 21% Whites

38. Uncertainties and Litigation Issues

39. Uncertainties and Litigation Issues • Outcome and Impact of Land Claims case on Alexkor • Awaiting court proceedings and ruling on other legal matters • Possible restructuring post land claims case • Financial implications include legal fees and possible compensation • Limited provision has been made for payment of possible settlement amounts • Alexkor counterclaimed against some of the cases • We expect the cases to be concluded by 2nd quarter of 2006

40. Conclusion

41. Conclusion • Short-term focus is on improving financial performance: • Optimise the use of available resources • Implement initiatives for productivity improvement • Continuous reduction of both operating costs and pay-limit • Develop a long-term strategy to transform the company: • Move Alexkor beyond a single mine company • Collaborate with established companies and leverage on their ability to fund expansion plans • Implementation of remote mining techniques

42. Thank you

43. Financial & Production Review Consolidated Results (R’000)

44. Financial & Production Review

45. Financial & Production Review