Transcript South America’s Largest Diamond Producer May 2008 Cautionary Statement All monetary amounts in U.S.

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South America’s
Largest Diamond Producer
May 2008
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Cautionary Statement
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 www.sedar.com.
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.
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Vaaldiam Resources – Strategic Plan
South America’s largest diamond producer
Producer of high value diamonds - average value $280 per carat
Two debt free mines in production
Focused on low cost, low risk diamond production in Brazil
Investing cash flow in kimberlite development & exploration
Targeting 500,000 carats annual production by 2011
Consolidator of the emerging diamond sector in Brazil
Increasing demand & prices for diamonds
All Currency Figures US$ Unless Otherwise Noted
Vaaldiam’s Duas Barras Mine under the lights
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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
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Exploration Expenditure Comparison
Brazil vs Canada
Diamond Exploration Expenditures
($US Millions)
350
300
250
Canada
Africa
Brazil
200
150
100
50
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Trends in Cdn Mineral Exploration & Pers. Communication with Operating Companies in Brazil; Ontario
Ministry of Northern Development and Mines
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Production & Advanced Exploration
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Producing Mines
Duas Barras
Chapada
Annual
Production
60,000 to
83,000 cts
Annual
Production
33,000 to
37,000 cts
Diamond Value
US$ 165 / ct
Diamond Value
US$400 /ct
Cash Cost of
Production
US$ 75 / ct
Cash Cost of
Production
US$ 290 / ct
Mine Life
8 Years
Mine Life
>6 Years
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Producing Mines (cont’d)
Duas Barras
Chapada
Mine Opening
September 07
Mine Opening
March 07
Sales to End Q1
US$ 4.9 M
Sales to End Q1
US$ 11.9 M
Capital Cost
US$ 3.8 M
Capital Cost
US$ 8.5 M
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Chapada’s Production
is “Special”
30.95 Carat Diamond
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Key Partners in the Diamond
Market
Chapada Diamonds
Run of
Mine
Production
Polished
Diamonds
LEVIEV
RETAIL
STORES
London
New York
Dubai
Moscow
&
Other Clients
Duas Barras Diamonds
Run of
Mine
Production
Sorted
Rough
Diamonds
MANUFACTURERS
Antwerp
Israel
India
China
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Investing in Organic Growth
$1.7 M
$0.8 M
$0.7 M
$3.3 M
$1.0 M
2008 Exploration & Development
Braúna Feasibility Study
Pimenta Bueno/Ariquemes Bulk Sampling
Catalão Resource Definition
Mine Capex & Resource Expansion
Overhead & Other
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2008 Exploration Targets Four-fold
Increase of Diamond Resource
To increase
our resource
base
C$ 7.5 Million in 2008
Braúna Feasibility
2,600,000 carats
Duas Barras
Expansion
150,000 carats
Additional Carats
to Resource in
2008
2,750,000 carats
43-101 Resource @
YE 2007
701,840 carats
Projected 43-101
Resource at YE
2008
3,451,840 carats
Est. Exploration
Cost of Additional
Resources
$ 2.75 per carat
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New Production Expected in 2009
Braúna Kimberlite Project
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
Projected Inferred
Resource to -200 m
11.2 M tonnes
Projected Average
Recovered Grade
23 cpht
Projected Diamond
Resource
2.6 M carats
N.B. Resource estimate is not yet 43-101 compliant
Cpht = carats per 100 tonnes
Diamond value estimated at US$125 to
$165 per carat 1
Excellent potential for +20 million tonne
resource and long-life U/G operation
Excellent infrastructure = low capital &
operating costs
1. Preliminary company estimate based on
diamonds recovered from bulk samples
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Brauna Kimberlite System
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Braúna 3 Kimberlite Pipe
View Facing Northeast
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Braúna Resource Potential 1
Total Potential
Volume (tonnes)
to -200 metres
Average Grade
Based on Sampling
(cpht)
Total
Projected
Carats
Brauna 3
5,554,094
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1,166,360
Brauna 7
1,100,000
5
55,000
Brauna 8
2,160,000
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1,036,800
Brauna 11
1,350,000
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256,500
Brauna 21
1,000,000
7
70,000
TOTAL
11,164,094
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2,584,660
Kimberlite Body
Note 1: Resources are not yet 43-101 compliant. Brauna 3 & Brauna 7 estimates were calculated from solid modelling by Wardrop
Engineering Inc. of the detailed drilling completed by Vaaldiam in 2007. Volume estimates for Brauna 8, 11 and 21 are based on
surface trenching, mini-bulk sampling and limited drilling. Density conversion factors ranging from 2.75 to 2.76 are based on
actual rock density measurements.
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Diamond Production Profile
450
425
425
Total Carats Produced
(000’s)
400
350
Braúna
Chapada
Duas Barras
300
244
250
200
150
95
100
50
42
0
2007
Source: Vaaldiam management estimates
2008
2009
2010
2011
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Operating Cash Flow ($Millions)
Operating Cash Flow Projection
48
45
42
39
36
33
30
27
24
21
18
15
12
9
6
3
0
45.7
44.9
2010
2011
Braúna
Chapada
Duas Barras
26.6
10.8
2.5
2007
Source: Vaaldiam management estimates
2008
2009
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Advanced Stage Exploration
Pimenta Bueno/Ariquemes
46 kimberlite pipes
24 pipes sampled & diamond bearing with grades up
to 18 cpht
Catalão Kimberlite Project
9 kimberlite pipes discovered to date
High value alluvial production from district
Large tonnage potential : drilling outlined +200 Mt
in 5 pipes
23.6 cpht grade from Rio Tinto mini-bulk
sample from 1 ha Catalão pipe
Bulk sampling underway to define diamond grade in
priority pipes
Bulk sampling & resource definition drilling
planned for 2008
Rio Tinto has back-in rights on Pimenta Bueno
licences for 60% and VAA carried at 40%
Advanced stage development; approximately
1 year behind Braúna time-line
Excellent tin and base metal potential on Ariquemes
Rio Tinto has back-in rights on Catalão
licences for 60% and VAA carried at 40%
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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 Q2 2008
Conceptual Mine Study underway ahead of development of a 43-101
compliant resource
Excellent possibility for Joint Venture development or outright sale
for value
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Our Goal :500,000 Carats
Annual Production By 2011
500,000 carats / year in sight!
Projected Production by 2010:




Duas Barras
Chapada
Brauna
Total
83,000 carats
37,000 carats
300,000 carats
420,000 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
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Upcoming News
Q-2 2008:
 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
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Vaaldiam – Investment Highlights
South America’s largest diamond producer from two mines
Producer of high value diamonds - average value $280 per carat
Re-investing positive operating cash flow in low cost, low risk kimberlite
development & exploration in Brazil
Strong treasury to support organic growth
Targeting 500,000 carats of annual production by 2011
Undervalued - Trading at just two times 2010 operating cash flow
Consolidator of the emerging diamond sector in Brazil
Vaaldiam’s Duas Barras Mine under the lights
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Corporate Information
VAALDIAM
Shares Outstanding
Cash (C$M)
Fully Diluted Cash (C$M)
Largest Shareholder
Market Capitalization (C$M)
Debt (C$M)
52 Week High/Low
Trading Symbol
213.8 Million
$6.3 Million
$ 64.0 Million
42.9 Million (20%)
$96 M
None
$1.10/$0.40
VAA - TSX
27 carat diamond from the Chapada Mine
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South America’s
Largest Diamond Producer