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1 South America’s Largest Diamond Producer May 2008.

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Presentation on theme: "1 South America’s Largest Diamond Producer May 2008."— Presentation transcript:

1 1 South America’s Largest Diamond Producer May 2008

2 2 All monetary amounts in U.S. dollars unless otherwise stated. This presentation contains “forward-looking statements”, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and similar Canadian legislation, concerning the business, operations and financial performance and condition of Vaaldiam. Forward-looking statements include, but are not limited to, statements with respect to estimated production, synergies and financial impact of completed proposed acquisitions; benefits of the acquisitions and the development potential of Vaaldiam’s properties; the future price of diamonds; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures, success of exploration activities; permitting time lines and permitting, mining or processing issues; currency exchange rate fluctuations; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; title disputes or claims; and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Vaaldiam to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to: unexpected events during construction, expansion and start-up; variations in ore grade, tones mined, crushed or milled; variations in relative amounts of refractory, non-refractory, non-refractory and transition ores; delay or failure to receive board or government approvals; timing and availability of external financing on acceptable terms; the businesses of acquisitions not being integrated successfully or such integration proving more difficult, time consuming or costly than expected; not realizing on the anticipated benefits from the acquisitions or not realizing on such anticipated benefits within the expected time frame; risks related to international operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of diamonds and gold; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate an anticipated; accidents, labour disputes and other risks of the mining industry; delays in the completion of development or construction activities, as well as those factors discussed in or referred to in the current annual Management’s Discussion and Analysis and current Annual Information Form of Vaaldiam filed with the securities regulatory authorities in Canada and available at Although management of Vaaldiam has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Vaaldiam does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws. Cautionary Statement

3 3 South America’s largest diamond producer Producer of high value diamonds - average value $280 per carat Two debt free mines in production Focused on low cost, low risk diamond production in Brazil Investing cash flow in kimberlite development & exploration Targeting 500,000 carats annual production by 2011 Consolidator of the emerging diamond sector in Brazil Increasing demand & prices for diamonds Vaaldiam’s Duas Barras Mine under the lights Vaaldiam Resources – Strategic Plan All Currency Figures US$ Unless Otherwise Noted

4 4 Why Brazil? Long history of high quality diamond production Similar diamond geology to southern Africa and Canada Under-explored for diamonds Low mineral exploration and mine development costs Excellent infrastructure S&P Investment-grade credit rating Low political risk Stable mining and environmental legislation

5 5 Exploration Expenditure Comparison Brazil vs Canada Source: Trends in Cdn Mineral Exploration & Pers. Communication with Operating Companies in Brazil; Ontario Ministry of Northern Development and Mines Diamond Exploration Expenditures ($US Millions)

6 6 Production & Advanced Exploration

7 7 Producing Mines Duas Barras Chapada Annual Production 60,000 to 83,000 cts Diamond ValueUS$ 165 / ct Cash Cost of Production US$ 75 / ct Mine Life8 Years Annual Production 33,000 to 37,000 cts Diamond ValueUS$400 /ct Cash Cost of Production US$ 290 / ct Mine Life>6 Years

8 8 Producing Mines (cont’d) Duas Barras Chapada Mine OpeningSeptember 07 Sales to End Q1US$ 4.9 M Capital CostUS$ 3.8 M Mine OpeningMarch 07 Sales to End Q1US$ 11.9 M Capital CostUS$ 8.5 M

9 9 Chapada’s Production is “Special” Carat Diamond

10 10 Key Partners in the Diamond Market Chapada Diamonds Duas Barras Diamonds LEVIEV RETAIL STORES London New York Dubai Moscow & Other Clients MANUFACTURERS Antwerp Israel India China Run of Mine Production Polished Diamonds Sorted Rough Diamonds Run of Mine Production

11 11 Investing in Organic Growth Mine Capex & Resource Expansion Braúna Feasibility Study Pimenta Bueno/Ariquemes Bulk Sampling Catalão Resource Definition Overhead & Other $3.3 M $1.0 M $0.7 M $0.8 M $1.7 M $ 10 Million Operating Cash Flow Projected for 2008 C$7.5 M Invested In 2008 Exploration & Development

12 Exploration Targets Four-fold Increase of Diamond Resource C$ 7.5 Million in 2008 Braúna Feasibility2,600,000 carats Duas Barras Expansion 150,000 carats Additional Carats to Resource in ,750,000 carats YE ,840 carats Projected Resource at YE ,451,840 carats Est. Exploration Cost of Additional Resources $ 2.75 per carat To increase our resource base

13 13 New Production Expected in 2009 On-track to be South America’s first kimberlite diamond mine after +250 years of alluvial diamond production Feasibility study underway Production targeted for mid-2009 Targeting annual production of 300,000 carats per year High quality diamonds recovered from bulk samples including pink diamonds Diamond value estimated at US$125 to $165 per carat 1 Excellent potential for +20 million tonne resource and long-life U/G operation Excellent infrastructure = low capital & operating costs Projected Inferred Resource to -200 m 11.2 M tonnes Projected Average Recovered Grade 23 cpht Projected Diamond Resource 2.6 M carats Braúna Kimberlite Project 1. Preliminary company estimate based on diamonds recovered from bulk samples N.B. Resource estimate is not yet compliant Cpht = carats per 100 tonnes

14 14 Brauna Kimberlite System

15 15 Braúna 3 Kimberlite Pipe View Facing Northeast

16 16 Braúna Resource Potential 1 Note 1: Resources are not yet compliant. Brauna 3 & Brauna 7 estimates were calculated from solid modelling by Wardrop Engineering Inc. of the detailed drilling completed by Vaaldiam in Volume estimates for Brauna 8, 11 and 21 are based on surface trenching, mini-bulk sampling and limited drilling. Density conversion factors ranging from 2.75 to 2.76 are based on actual rock density measurements. Kimberlite Body Total Potential Volume (tonnes) to -200 metres Average Grade Based on Sampling (cpht) Total Projected Carats Brauna 35,554,094211,166,360 Brauna 71,100,000555,000 Brauna 82,160,000481,036,800 Brauna 111,350, ,500 Brauna 211,000,000770,000 TOTAL11,164,094232,584,660

17 17 Diamond Production Profile Source: Vaaldiam management estimates Total Carats Produced (000’s) Braúna Chapada Duas Barras

18 18 Operating Cash Flow Projection Source: Vaaldiam management estimates Operating Cash Flow ($Millions) Braúna Chapada Duas Barras

19 19 Advanced Stage Exploration 46 kimberlite pipes 24 pipes sampled & diamond bearing with grades up to 18 cpht Large tonnage potential : drilling outlined +200 Mt in 5 pipes Bulk sampling underway to define diamond grade in priority pipes Rio Tinto has back-in rights on Pimenta Bueno licences for 60% and VAA carried at 40% Excellent tin and base metal potential on Ariquemes 9 kimberlite pipes discovered to date High value alluvial production from district 23.6 cpht grade from Rio Tinto mini-bulk sample from 1 ha Catalão pipe Bulk sampling & resource definition drilling planned for 2008 Advanced stage development; approximately 1 year behind Braúna time-line Rio Tinto has back-in rights on Catalão licences for 60% and VAA carried at 40% Catalão Kimberlite Project Pimenta Bueno/Ariquemes

20 20 Candle Lake Kimberlite Project Fort a la Corne, Saskatchewan Two large diamond-bearing kimberlites - Fort a la Corne kimberlite trend Macro-diamond grades up to 24 cpht Large tonnage potential : > 100 Mt in C29/30 pipe alone 503 tonne sample – results due in Q Conceptual Mine Study underway ahead of development of a compliant resource Excellent possibility for Joint Venture development or outright sale for value

21 21 Our Goal :500,000 Carats Annual Production By ,000 carats / year in sight! Projected Production by 2010:  Duas Barras 83,000 carats  Chapada 37,000 carats  Brauna300,000 carats  Total420,000 carats 500,000 carats / annum in 2011 is a realistic target – achieved through organic growth from:  Chapada Mine expansion – short term, 90% of property holdings unexplored  Braúna Mine development – short term, feasibility underway  Catalão kimberlites – medium term  Duas Barras Mine – medium term, expansion through acquisitions in district  Pimenta Bueno/Ariquemes kimberlites – medium to long term

22 22 Upcoming News Q :  Production results & Operational Update from Duas Barras and Chapada mines  Macro diamond results from Candle Lake mini-bulk sampling program  Update on Bulk Sampling program & Feasibility at Braúna  Bulk sampling results from Pimenta Bueno  Exploration update on Catalão kimberlite program

23 23 South America’s largest diamond producer from two mines Producer of high value diamonds - average value $280 per carat Re-investing positive operating cash flow in low cost, low risk kimberlite development & exploration in Brazil Strong treasury to support organic growth Targeting 500,000 carats of annual production by 2011 Undervalued - Trading at just two times 2010 operating cash flow Consolidator of the emerging diamond sector in Brazil Vaaldiam’s Duas Barras Mine under the lights Vaaldiam – Investment Highlights

24 24 27 carat diamond from the Chapada Mine Shares Outstanding Largest Shareholder Market Capitalization (C$M) Cash (C$M) Debt (C$M) 52 Week High/Low Trading Symbol $1.10/$ Million $ 64.0 Million 42.9 Million (20%) $96 M $6.3 Million None VAA - TSX VAALDIAM Corporate Information Fully Diluted Cash (C$M)

25 25 South America’s Largest Diamond Producer


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