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ANTWERP Kept promises & Transparent value creation

ZIM ASSET BLUEPRINT PARLIAMENTARY SEMINAR. ANTWERP Kept promises & Transparent value creation. ARI EPSTEIN CEO Antwerp World Diamond Centre. 12/03/2014. Introduction. Largest concentration of diamond trading companies (1700+) a nd of major rough diamond producers. Why Antwerp ?.

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ANTWERP Kept promises & Transparent value creation

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  1. ZIM ASSET BLUEPRINT PARLIAMENTARY SEMINAR ANTWERP Kept promises & Transparent value creation ARI EPSTEIN CEO Antwerp World Diamond Centre 12/03/2014

  2. Introduction

  3. Largestconcentration of diamondtrading companies (1700+) and of major roughdiamond producers WhyAntwerp? Antwerpgenerates the highest market priceforroughdiamonds +15% comparedtoothercentres Highest level of transparency in the world Major financial institutions supporting the industry

  4. Introduction

  5. Antwerp ... kept promises • Sept. 2013 : • EU sanctions against ZMDC lifted Antwerp lobbying efforts • exports to Antwerp can resume • Nov. 2013 : • Antwerp delegation to Zimbabwe • commitment to Minister of Mines Chidakwa to create more revenue through transparent tendering in Antwerp • MOU for technical assistance • December 2013 : • Trial tender of Marange goods: high potential • Nov. 2011 – Dec. 2012 : • Antwerp supports KP monitoring team • M. Van Bockstael & A. Chicane • Objective, transparent review reports Nov. 2009: KP declares Marange mining operations non-compliant- Marange rough banned 2009 2010 2011 2012 2013 2014 October 2010 : Antwerp fact finding mission to Zimbabwe  Commitment to former Minister of Mines Mpofu to help lift EU-sanctions on ZMDC February 2014 : 2nd Trail tender of Marange goods: unprecedented success November 2012 : Marange conform minimum requirements  exports resumed

  6. Economic Value additionfor Zimbabwe Insight in the diamondvalue chain 2012 revenu, $ billion Source: IDEX, Tacy Ltd. And Chaim Even-Zohar, Diamond Value Chain 2010, Bain report 2011 * Bain estimate, ** total diamond jewelry retail sales

  7. Import vs. Export comparison Trade volume Source: Annual Global Summary 2009-2010-2011-2012 Production, Imports, Exports and KPC Counts China and India are polishing centers, resulting in these rather high negativemovement percentages.

  8. Import vs. Export comparison Averageprice per caratmovement Revenues are generated outside of the producing country, resulting in beneficiation losses.

  9. Sales Mechanism Before and After EU-delisting ZMDC BEFORE Diff = $ 4,95/Ct x 12 M. Ct/year = 59,4 Million USD on annual basis Royalty to the government: $47 x 15% = $7,05 /Ct 564 M$/year $76 /Ct $47 /Ct AFTER Royalty to the government: $80 x 15% = $12 / Ct 960 M$/year $82 /Ct $80 /Ct In case of full Run of Mine potential > $100 / Ct $76 /Ct

  10. Recent ANTWERP Tenders Sold goods 1st Tender Carat USD 2nd Tender Carat USD

  11. Recent ANTWERP Tender Conclusions • Revenue +30% above expected ‘reserve price’, where the reserved price was hardly ever achieved in Zimbabwe. • Revenue +50-60% above tender prices in Zimbabwe/other trade centres • Prices for individual stones as high as $18,000/Ct compared to a stated maximum of $400/Ct in previous Zimbabwe Sales. • Better cleaning (deep boiling) and sorting  better prices • No full run of mine production  Compared to footprint • All mining companies and the Zimbabwean Embassy where represented at the tender  Full Transparency

  12. Economicvalueadditionfor Zimbabwe Potentialsequence of steps forgrowth

  13. Value addition for Zimbabwe Antwerp’s proposal

  14. Conclusion From ZIMBABWE to ANTWERP and back  the best way to value creation

  15. THANK YOU

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