the douglas proposition

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Page 1: The Douglas Proposition
Page 2: The Douglas Proposition

This presentation (the “Presentation”), which has been prepared by DreamStone Mining (the “Company”), is confidential and is being provided to a limited number of recipients solely for their information and may not be copied, published, reproduced or redistributed in whole or in part to any person at any time, or used for any other purpose, without the prior written consent of the Company. The Presentation has not been independently verified and the information contained in it is subject to updating, completion, revision, verification and further amendment. The Presentation does not purport to contain all information that a prospective investor may require.

This Presentation does not constitute, or form part of, an advertisement or any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase, any securities of the Company, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment whatsoever with respect to any such securities.

This Presentation has not been approved by an authorized person pursuant to section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and accordingly, in the United Kingdom, it is issued and only made available to, and directed at (a) persons who are investment professionals falling within the scope of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (b) high net worth entities and other persons to whom it may otherwise lawfully be communicated falling within the scope of Article 49 of the Order; and (c) any other person to whom this communication may otherwise lawfully be communicated or caused to be communicated (all such persons in (a) to (c) together being referred to as “relevant persons”). Any investment or investment activity to which the Presentation relates is available only to relevant persons or will be engaged in only with such persons, and persons who do not have professional experience in matters relating to investments, and persons of any other description, should not rely or act upon it. The communication of this Presentation to any other person in the United Kingdom other than relevant persons is unauthorized and may contravene FSMA. This Presentation is being made in Canada only to persons to whom the securities may be sold and only by persons permitted to sell such securities.

The information in this Presentation was obtained from various sources. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions (whether written or oral) contained in the Presentation. The information contained in this Presentation is for the recipient’s information regarding the Company and is for discussion purposes only.

Accordingly, none of the Company or any of their shareholders, directors, officers, managers, agents, employees or advisors take any responsibility for, or will accept any liability, whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of, the accuracy of completeness of the information herein or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation.

This Presentation contains confidential information and by viewing this Presentation, the viewer agrees that all the information contained herein, and any separate report and any further information concerning the Company provided or made available to the viewer, will be used by the reader solely to determine his/her interest in the Company, and that such information shall be retained exclusively and in confidence for the benefit of the Company. The viewer agrees that he/she will not, without the express prior written consent of the Company, make use of, disseminate or in any way disclose any of such information to any person, firm or business, except to the extent necessary for negotiations, discussions and consultations with personnel or authorized representatives of the viewer for the purpose of determining such interest in the Company.

This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, managers, agents, employees or advisors. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption and each recipient should satisfy itself in relation to such matters.

No securities commission or other similar regulatory authority has reviewed or passed on the merits of this Presentation and any representation of the contrary is an offence. This Presentation is not, and under no circumstances is to be interpreted as, a prospectus (whether under section 87A of FSMA, or otherwise), public information, solicitation or advertisement for the sale or trade of securities, and has not been approved by or filed with the UK Financial Services Authority.

Nothing in this disclaimer shall be effective to limit or exclude any liability which by law cannot be limited or excluded. The information and opinions contained in this Presentation are provided as at the date of this Presentation. The contents of this Presentation are not

to be construed as legal, financial or tax advice. Each prospective investor should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice.

Page 3: The Douglas Proposition

Why this project

Two proven deposits from different catchments' areas south of Kimberley.

Exceptional high-value gemstone diamonds.

Diamond history of 5000 ct on each property.

Up to 5% expectation of >100ct stones.

Long life diamond bearing resources on both deposits.

License renewal for 30 years.

Special permit (section 21) available for mining up to 20m from river on Sanddrift.

Diamond demand is progressively outgrowing supply.

Low capital cost – Quick cash flow.

Page 4: The Douglas Proposition

World class diamonds.

Several big diamonds greater than 50 carats were discovered.

This Fancy Vivid yellow was a 190.73carat in the rough.

The surrounding area is also known for big size stones.

Schmidtsdrift –235ct stone.

Annashoop – 311ct stone.

Schutsekama – 108+ 123ct stones.

Page 5: The Douglas Proposition
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Fundamental & Historical

- Downstream of Schmidtsdrift Mine, owned and operated by Nare Diamonds (2006-2008). Famous for a 235 carat stone.

- Situated on the oldest and highest Vaal river terraces (higher grade)

- Similar to Droogeveldt deposits upstream from Schmidtsdrift where Majestic Resources recovered 18stones >100ct including a 202ct and 308ct stone.

Technical

- Inferred Resource of 2,864 375.6 million tonnes.

- Exploration potential of 100 hectare → ± 10 million tonnes. Need drilling to confirm.

- Grade: - 0.65 cpht

- Inferred carats: - 18 618.44 carats. Exploration area expectation: - 65 000 carats.

- Value per carat: - US$ 905.66

- Inferred Resource value: - US$16,861 977.63million.

- Expected exploration area value: US$59million

- Diamond history: - 5588 carats from 36 hectares (2001-2005)

- Recovered stones: 27, 29, 40, 18, 23, 18, 19, 19, 65, 27, 26, 38, 24, 26, 30, 27, 30, 40, 35, 18, 30, 20, 32, 20, 29. (ratio 1: 223 diamonds)

Independent Report

- Shemen B’Kush - J.G. Erasmus (Mining Engineer) on 12 Oct. 2010.

- Calculated 36 hectares are mined out.

Page 8: The Douglas Proposition
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Fundamental & Historical

- Borders downstream on Schutsekama Mine, owned and operated by Reho Mining

(2003-2009).

Schutsekama historically produced 51 774.57 carats.

- Presence of >100ct stones makes up for 5% of total carat production.

- More than 50% of stones recovered are bigger than 2 carats. - Main source of diamonds seems to be several Kimberlite pipes within the drainage basin of the Riet River and includes Jagersfontein and Koffiefontein mines.

- Annashoop produced a 311 carat stone.

- Sanddrift produced a 190 carat Fancy Vivid Yellow (SI1) stone, sold in 2005 for $2.5million ($13,509.84/ct).

- Schutsekama produced a 123 and 108 carat Fancy Yellow stones, which were

sold in 2005 for $1.05m ($8,569.25/ct) and $0.93m ($8,659.00/ct) respectively.

Technical

- Inferred Resource of 7,260 000.00 million tonnes.

- Exploration potential of 670 hectares → ± 14.8 million tonnes. Need drilling to confirm.

- Grade:-0.35cpht

- Inferred carats: - 24 090 carats. Exploration area expectation: - 44 400 carats.

- Value per carat: - US$ 1300.00

- Inferred Resource value: - US$31,317 000million.

- Expected exploration area value: US$57.7million

- Diamond history: - 6000 carats from 50 hectares (2000-2008)

- Special Sec.21 permit to mine 20 meter from river edge.

Independent Report

- Geo-Rock International – HR Loots (Geologist) on 01 Nov. 2010.

- Calculated 50 hectares are mined out.

Page 11: The Douglas Proposition

The CFCs for Intuthuko on Schutsekama shows

that the majority (>50%) of carats recovered

from this deposit (middle or Rietputs B

terrace) consist of +2 carats stones.

What is impressive about the production from

Intuthuko’s production is the presence of

+100 carat stones which makes up for 5% of

total carat production of Intuthuko’s

production).

These figures thus predict a high average diamond

value and indicate that the deposit will yield

stones over 100 carats on a regular interval.

The Sanddrift 101 gravel is a continuation of this

“Rietputs B & C terrace” gravel deposit.

Geduld 61 follows the Vaal River curve.

Page 12: The Douglas Proposition

Schmidtsdrift mine – 0.61cpht – $1,256 p/c.

Holpan & Klippan mine – 0.44cpht – $1,020 p/c.

Wouterspan mine – 0.37cpht – $1,916 p/c.

Saxendrift mine – 0.31cpht – $1,916 p/c.

Nuwejaarskraal mine – 0.40cpht – $1,076 p/c.

Schutsekama mine – 0.30cpht – $1,365 p/c.

Silverstreams Mine - 0.44cpht - $2,019 p/c.

Sanddrift Mine - 0.35cpht - $1,300 p/c.

Geduld Mine - 0.65cpht - $900 p/c.

Page 13: The Douglas Proposition

ROM Bin

Back-fill

Trommel screen

-70 mm + 2.0 mm

+70 mm Oversize

Plant ROM Stockpile

Sand screen

-70 mm

-2.0 mm

MINING

Gravel quarry

Page 14: The Douglas Proposition

Final RecoveryX-Ray, Grease

Scrubber Prep-Screen

Scrubber watersupply -2.0 mm

+0.35 mm

+50 mm

-50 mm +2.0 mm

Rehabilitation

-70 mm +50 mm toRehabilitation

Tailings

Concentrate

ConcentrateBin

- 0.35 mm

Return water

Freshwaterpump

Processwater dam

De-grit screen

ROM Bin

EXPLORATION PLANT

Rotary Pan

Page 15: The Douglas Proposition

MAIN PLANT

Final RecoveryX-Ray, Grease

Scrubber

Prep-Screen

Scrubber watersupply -2.0 mm

+0.35 mm

-30 mm +2.0 mm

Rehabilitation

-50 mm+30 mm

Tailings

Concentrate

ConcentrateBin

- 0.35 mm

Return water

Freshwaterpump

Processwater dam

De-grit screen

ROM Bin

Concentrate

+50 mm

-70 mm +50 mm toRehabilitation

Rotary Pan 1

Rotary Pan 2

Page 16: The Douglas Proposition

Financials . . .The DreamStone project has been financed by the founder to

date

DreamStone is now seeking for Geduld 61: US$5.7 million

- US$3.5 million are required for plant and machinery.

-US$2.2 million is required for operation costs for the first 10

months.

DreamStone is now seeking for Sanddrift 101: US$5.7 million

- US$3.5 million is required for plant and machinery.

- US$2.2 million is required for operation costs for the first 10

months.

Inclusive of the exploration plant to start generating cash flow

from as early on as 3 months – 116 tph ROM.

Main plant commissioning alongside exploration plant to start-

up in month 10 – 232 tph ROM.

Sanddrift 101 and Geduld 61 combined to process 4.6 million

tonnes of gravel/year.

Average of 0.475 cpht = 21,850 carats x average US$1102.5 =

US$24,1 million/year turn over.

Operating cost of $3/ton = US$13.8million/year.

Profit of US$10.3 million/year.

Page 17: The Douglas Proposition

Management team

Martin Prinsloo, M.B.A., B.Proc – Law degree., Management Diploma – NVQ level 5,

Certificates – Law of Contracts; SA Labour Law.

Martin Prinsloo offers more than a decade of accomplishment laden experience in the

alluvial diamond mining industry, driving achievement of the highest priority exploration

and recovery methods and operation efficiency goals. He acted as a key strategic and tactical

contributor in cost saving initiatives. Martin brings valuable insight and knowledge regarding the

leadership and management challenges faced by small start-up and growing alluvial diamond mining

companies.

Beginning his career in the diamond mining sector in 1991 when he acquired his first diamond mining

license in South Africa. Demonstrating initiative from the start, Martin propelled from sole ownership

diamond mining to partnerships which generated management positions in larger companies and

eventually he was head hunted for his expertise by Jasper Mining Ltd.

Martin is also a qualified South African lawyer, where he holds a certificate of distinction from law

school. He spend one year with Sasol Nitro explosives as training officer and was fortunate to visit all

gold, coal, platinum and diamond mines where Sasol had to supply explosives.

The scope of his experience has spanned virtually all aspects of alluvial diamond mining and recovery,

including exploration, plant commissioning, earthmoving and machinery, staff management,

production, sales of diamonds, and logistics, as well as team building and leadership, technology

implementation and operations administration.

Page 18: The Douglas Proposition

Management

Sam Hamer, Tech Dipl – N4, N5 & N6. Certificate – Surface blasting Technology.

Specialist courses on, Crusher Planning, Maintenance & Operation, Processing

Aggregates, Mechanical Drawing & Design, Strength of Materials & Structures.

Sam is DreamStone’s man for maintenance of all the machinery, design of new equipment and has the

ability to built new designs and improve on old designs to safe costs and improve effectiveness and

efficiency.

He is a self-motivated, peak performing individual with hands-on experience in electrics, mechanics,

hydraulics, pneumatics and electronics. He enjoys the challenge of achieving goals and accomplishing

objectives.

Sam worked in positions as Maintenance Manager – Bergchem/Sentrachem, Owner – Kwikfit motor

vehicle fitment centre, Owner – Smacon Engineering, DDS Maintenance Foreman – Sasol Nitro,

Maintenance Manager – Stone and Allied (Basil Read).

He is currently the Civil Yard Manager – Basil Read (Construction, Mining, Building and Roads).

Page 19: The Douglas Proposition

Both projects are fairly early stage with high exploration potential. They

are both in good areas with superb history and the preliminary

information indicates that either, or both, could be potentially economic.

We have a well-thought out plan to get where we need to be.