Boteti AK6 Mine

Construction underway to deliver diamond production in 2012

Mining in Botswana Conference18-20 October 2010The Grand Palm, Gaborone

Presented by: James AH CampbellBoteti & African Diamonds

Agenda• Diamond market• Botswana• Management• Timeline to a mine• Corporate transaction• Resource• Development plan• Process plant• Manpower• Development timeline• Opportunities• Diamond marketing• Project finance

Diamond Market

• Sustained recovery in diamond prices

• Significant supply shortfall expected from 2012 which will drive demand:– Lack of significant new diamond

discoveries– Current mines ageing

• Destocking of cutting centres and return of bank finance are stimulating cutting centre demand for rough

• Rough prices have returned to their all time high

Still the Best Address in Diamonds: Botswana• One of the best countries to do business in

Africa: – Consistently one of the highest

sovereign credit ratings in Africa• Largest diamond producer by value in the

world, with 3 large operating diamond mines, all run by Debswana: – Produced 32M carats in 2008– Orapa mine is the 2nd largest diamond

mine in the world – Jwaneng is the richest mine in the

world, with a P/R ratio in excess of 80%.

– Letlhakane mine is located close to the AK6 mine.

– Damtshaa (4 kimberlites), currently on care and maintenance

AK6 Location

AK6 is proximal to some of Botswana’s largest diamond mines

5

AK6

15km

Strong Financial, Technical & Diamond Specific Experience

William Lamb – President & CEO and Director, Lucara• Manager of De Beers’ Victor diamond mine processing

facilities with over 19 years of experience in the diamonds and mineral processing industry

Dr. Larry Ott – VP Exploration and Director, Lucara• Former CEO of Motapa Diamonds with over 30 years

diamond and natural resource exploration experience

Tony George – VP Development, Lucara and AK6 Project Director• A professional engineer with over 30 years of experience in

the mining industry – General Manager at Victor diamond mine which was voted best mine Canada in 2008

James Campbell – Managing Director, African Diamonds• Over 25-years diamond and natural resource experience• Former General Manager at De Beers and Personal Assistant

to Nicky Oppenheimer

Alex van Zyl – Technical Director, African Diamonds • Over 40-years diamond and natural resource experience• Former Consulting Geologist to Anglo American and De Beers

Ribson Gabonowe – CEO, Boteti Mining• Previously CEO of AFD’s wholly owned Botswana subsidiary• Formerly Director of Mines for the Government of Botswana

Currently (ie. pre-transaction), the Boteti JV is owned 60% by Lucara Diamond Corporation, listed in Toronto TSX Venture Exchange, and 40% by African Diamonds plc

which is listed on the London AIM market and the Botswana Stock Exchange.

Lucara is a Lundin Group company and is the operator.

AK6 – Timeline to a Mine• 1969: Discovery

• 2004: Re-assessed by AFD & De Beers as a result of new geophysics & drilling technology

• 2008: Mining License approved by Government of the Republic of Botswana (‘GRB’)

• 2009: De Beers sold their share in Boteti to Lucara

• 2010 (June): Updated Feasibility Study completed, which included updating the EIA and EMP to be aligned with Equator Principles

• 2010 (July): EPCM awarded: DRA Africa Pty Ltd

• 2010 (Aug): ordering of long-lead items

• 2010 (Sept): Civils and earthworks contractor mobilized to site

• 2010 (Q4): Lucara buy out AFD

• 2011 (Q4): Commissioning scheduled

• 2012: Commercial production

Bulk Sampling on AK6

Corporate Transaction• Lucara to acquire AFD• Consideration of 0.8 of a Lucara share and 1 share

in Botswana Exploration plc for every 1 share in AFD

• Lucara and Botswana Exploration will seek a listing on the Botswana Stock Exchange.

• Post transaction, AFD shareholders will hold 26.57% of Lucara. Lucara also has a 75% stake in the Mothae Diamond Mine in Lesotho and will own 100% of AK6.

• The enlarged company will have a market capitalisation of c.US$240M.

The AK6 Resource

Classification +1.5mm (+1mm)

Lobe Tonnes (million)

Grade (cpht)

Carats(000’s)

US$/ct

Indicated(0-400m)

Centre / North

11.1 20 (26)

2,220 (2,886)

276 (223)

South 40.1 15 (20)

6,019 (8,026)

231 (183)

Total 51.2 16 (22)

8,239 (11,046)

243 (194)

3D Model of AK6 kimberlite

Classification +1.5mm (+1mm)

Lobe Tonnes (million)

Grade (cpht)

Carats(000’s)

US$/ct

Inferred(400-720m)

Centre / North

0.2 15 (20)

32 (42)

276 (223)

South 20.7 14 (19)

2,960 (3,946)

231 (183)

Total 20.9 14 (19)

2,992 (3,988)

231 (183)

Parameters Description

Mine Life 12 yrs

Mining Method Open-pit (contract mining)

Phase I Production

Phase II Expansion

2.5 Mt/yr starting 2012 (full

production)

4.0Mt/yr starting 2016

Reserve 38Mt @ 16cpht (1.5mm BCOS)

Capex (June, 2010)

Phase I

Phase II

(incl.14% Contingency)

US$ 120 million

US$ 36 million

Operating Cost US$ 17.51/t ore - average

GRB Royalty 10% of gross revenue

AK6 Development Plan

3D Model of Open Pit

3D Model showing AK6 Life of

Mine open pit

Process PlantSlimes Dam

Return Water Dam

Waste Dump

Recovery Plant

Mill Fed Stockpile

Tipping Bin and Primary Crusher

Pebble Crusher

AG Mill

DMS Plant

Mine Offices & Security

Stockpiles

Tailings

Manpower• Key local

appointments:– CEO– GM– HR Manager– SHE&CR

Manager– Office Manager– CFO (pending)

• Offices:– Diamond

Technology Park, Gaborone

– Letlhakane

AK6 Development Timeline

2010 2011 2012

H1 H2 H1 H2 H1 H2

Feasibility Study Update & EPCM Awarded

Civils / Earthworks Contractor Mobilized to Site

Access Road Construction

Power Line Construction

Project Engineering

Project Construction

Commissioning

Production

Variable Current Opportunity

Diamond Value Modelled: US$243/ct

Expected: USD250/ct+

Increased diamond price

Confirmation of rare high value

Type II diamonds

Increased stone value

Evidence of larger stones Increased revenue

Grade 16cpht (+1.5mm) Conservative estimate & autogenous milling will

liberate more diamonds.

The grade of the South lobe could be up to 40%

higher due to diamond breakage and lock-up in

the sampling programme

Reserve Bottom of open pit is currently

336m

The Indicated Resource exists down to 400m,

with an Inferred Resource down to 750m, so

plenty of opportunity to deepen the pit

AK6 Opportunities

AK6 Diamond Marketing• Marketing clauses in Mining License

agreed with GRB and diamonds will be sold through:– Open tender process– Negotiated exclusivity contract

• Standard 10% royalty on diamond sales paid on actual sales price

• Government Diamond Valuer (‘GDV’) will value Boteti goods prior to any sale

• Discussions advanced with diamantaires in terms of a marketing framework

AK6 Run-of-mine diamonds

AK6 Large & High Quality Diamonds

AK6 Project Finance

• Process:

– Long list of institutions approached

– Short list produced following detailed discussions

– Detailed discussions on indicative terms

– Standard Chartered Bank (‘SCB’) awarded mandate as lead project financier

• Opportunity to access preferential Export Credit Insurance Corporation (‘ECIC’) rates in addition to standard commercial terms

Summary

• AK6 mine on track for commissioning end 2011 and commercial production 2012

• General diamond marketing conditions concluded with GRB

• Lead bank appointed for project financing

• Key local appointments made

• Strong demand fundamentals

Any Questions?