Corporate Objectives

Sustainable growth through the operation of a suite of profitable producing mines:

• to operate all mines profitably, safely and efficiently;
• maximise diamond production and minimise cash costs by utilising in-house expertise and best industry practice, optimising production on underground mines and promoting economies of scale on alluvial and dump processing operations;
• capitalise on practical synergies resulting from the close proximity of the majority of the producing mines in the Group;
• generate cash flows to contribute towards, and expand the company's ability to acquire, new near production and advanced exploration opportunities;
• actively seek further acquisitions at low entry cost that can provide long-term growth and sustainable diamond production; and
• maintain a balanced portfolio of underground, alluvial and dump operations providing a range of rough diamond sizes and qualities to meet changing market demand.

Strategic Objectives

The Enlarged Group's primary business strategy in the short to medium term will be to develop its production assets in South Africa, with the objective of establishing KimCor as a leading mid-tier operating diamond company.

With regard to the recently acquired diamond assets of the company, the Directors have identified a number of areas where improvements in operating procedures, injection of capital for plant upgrades, expansion of existing facilities or implementation of new operating procedures can be expected to result in increased diamond production and improved cash flows.

The Directors have indicated previously their intent to build the Group into a substantial diamond mining and exploration business. This initiative was started with the purchase and development of the Bellsbank dump reclamation operation that focused KimCor on becoming a producer of diamonds rather than simply an exploration company.

Since that time, it has become apparent to the Directors, both through their own observations supported by general market sentiment, that consolidation in the Diamond Sector is long overdue and that the myriad of small diamond explorers and producers need to actively seek out strategic partners for acquisition or merger with various objectives in mind including the following:

At the corporate level:

• increasing market capitalisation and establishing a critical mass that would place the Company in the mid-tier of diamond producers worldwide;
• capitalising on the technical and financial strengths of potential strategic partners to broaden both the skills level and access to markets;
• broadening of the shareholder base at the fund management level to encourage the holding of long-term investment by large shareholders as well as at the retail level to encourage liquidity in the company's stock; and
• providing shareholders with value by adopting an aggressive but focused policy whereby diamond production can be increased to generate sufficient income to allow for a measure of sustainability and the ability to fund further acquisitions and continued growth.

At the operating level:

• placing an emphasis on diamond production over exploration based on the premise that production is cash generative and provides scope for either expansion of existing mining operations or acquisition of new resources for the benefit of shareholders;
• a strong focus on achievement of economies of scale and a reduction of production costs aimed at improving profit margins and permitting the mining and processing of lower grade resources that ordinarily would be uneconomic;
• improving processing plant efficiencies through application of best industry practice supported by the practical expertise of key personnel;
• maintaining an exploration presence, but with a focus on both potentially sizeable and highly profitable resources or targets that offer the benefits of synergy with existing mining operations within the Group;
• fostering innovative planning and day to day management of operations with a view to improving operational efficiency and maintaining a safe work environment, whilst limiting environmental impacts.

With these objectives in mind, the Directors consider the recent acquisition of the diamond mining and industrial assets of Dwyka to provide both the basic building blocks and scope for achievement of the abovementioned objectives.

With regard to specific projects and their capacity to meet expectations, the Directors have identified those areas of each individual mining and exploration asset acquired where improvements in operating procedures, injection of capital for plant upgrades, expansion or implementation of new operating procedures are expected to result in either a return to, or an increase in, profitability.