SMI-4 Processing Plant

De Beers began mining at Kimberley in 1888. Their operations during the subsequent hundred years of mining activity created vast tailing mine dumps derived from the processing of kimberlite ores. This material was subjected a variety of processing technologies that resulted in a high proportion of coarse kimberlite with relatively poor diamond liberation being deposited in tailings dumps. With modern technological advances, these tailings can be considered only partially processed and, as such, represent a significant resource.

KimCor has inherited the tailings Dwyka agreement with De Beers that allows for the processing of minimum monthly tonnages, reimbursement of working costs and shared profits from diamond sales at pre-agreed prices. Further, location of the re-treatment plant within De Beers' Kimberley mines property means that the project can benefit from established infrastructure that includes cost-effective access to security services, electrical and water supplies and tailings disposal facilities. Moreover, De Beers provides the Company with technical support.

Negotiations completed in October 2007, between Superkolong and De Beers resulted in the Company acquiring a total of 15.5 million tonnes of tailings with an inferred recoverable grade of 6cpht. The details of the acquisition can be found in a press release issued on 25 October, 2007. At the planned 150,000 tonne per month processing rate for the tailings, the SMI4 Project life has now been extended to between 8 and 10 years. The resource contains an estimated 930,000 carats with an in-situ value of approximately US$56 million.

A capital programme has been implemented that will improve the viability of the SMI4 plant by significantly increasing plant production capacity. The programme will specifically achieve the following:

• More than double production from the current rate of approximately 60,000tpm to over 150,000tpm;
• Optimisation of plant efficiencies by replacement of some elements of the existing plant and the installation of equipment including 6 x 16ft diamond recovery pans to reduce existing technical bottlenecks;
• Generate economies of scale benefits attributable to an increase in production throughput; and
• General refurbishment of the processing plant with a view to significantly reducing the historical maintenance cost.