2. Aims & Objectives Of Kimberley Diamond Bourse (Section 21 Company) 3,200 Members

3. Overview of Diamond Processing in the Republic of South Africa

4. Labour Investment in the Industry

5. Problems in the South African Diamond Industry

6. Reasons for Demindex I Kimberley Diamond Bourse (Pty) Ltd to support the Bill.

7. Monogram of the Group

8. Disinformation of the SA Diamond Industry

9. Demindex proposal (Business-plan)

10. Demindex legal suggestions on the New Bill.

11. Demindex I Kimberley Diamond Bourse (Pty) Ltd's vision

12. Break Points & Warranties

13. South African Diamond Resources

14. Conclusion

1. Demindex / Kimberley Diamond Bourse (Pty) Ltd

INTRODUCTION

The principle of equitable access.

• Our understanding is that one of the central aims of government in enacting the Diamond Amendment Bill is to promote EQUITABLE ACCESS in the diamond value chain. The principle of EQUITABLE ACCESS has it's roots embedded in the Freedom Charter and has remained a focus of government in policy development throughout the drafting of the BILL OF RIGHTS, the MINERAL AND MINING POLICY WHITE PAPER, the MPRDA and the BEE MINING CHARTER. EQUITABLE ACCESS is defined as access that is just, fair and impartial and therefore it is clear to us why government is determined to promote it so vigorously. We therefore agree wholeheartedly that the long-denied need for equitable access to the country's minerals can not be delayed any longer.

· Demindex is one of the first registered BEE companies.

· The Company was registered to promote the development of diamond and other resources on the continent of Africa and to add value thereto.

· Demindex involved itself in the Court Case No.26500101 in order to obtain its Exchange Permit in terms of Section 47 of the Diamond Act, 1986 (Act 56 of 1986) and to pursue its vision of added value to diamond resources on the Continent of Africa. The permit was granted in terms of court order No. 26500/01 to its subsidiary company Kimberley Diamond Bourse (Pty) Ltd Reg. No.20001030188107.

· The group of companies is committed to the development of a truly South African profile.

2. Demindex / Kimberley Diamond Bourse (Pty) Ltd

Reg. N.o.2000I028078/08

AIMS AND OBJECTIVES

1. To promote and facilitate the emergence of the Developing Diamond Mining Industry (DDMI) in Africa.

2. To co-ordinate and Disseminate information on Diamond Mineral Properties and related opportunities in the Republic of South Africa and in other African countries.

3. Identify and bring together investors, joint venture parties and other participants in the DDMI.

4. Familiarize organizations such as the World Bank and other international financial institutions to the needs of the DDMI of Africa.

5. Promote private and public investment in the potential growth of the DDMI in Africa.

6. Provide the DDMI members with professional, commercial, legal and technical assistance and expertise in order to attract foreign investment so as to derive maximum benefit from the rich natural mineral wealth of South Africa and Africa.

7. Support security of tenure of mineral rights while striving to provide greater access to mineral rights for DDMI participants or members, supported by full representation at Government level both in the Republic of South Africa and Africa, so promoting the African Renaissance programme.

8. Promote the development of diamond processing and enrichment, as well as adding value to diamond products mined in the African region.

9. Provide an interchange of diamond investment proposals and opportunities in the Republic of South Africa and other African countries.

10. Provide the governments of South Africa and other African countries, as well as the SAD-C with a platform to put forward their diamond resource strategies and meet with local international role players in the DDMI.

11. Obtain and provide up to date information to industry participants regarding the availability and prospectivity of areas for exploration and to report on progress and significant results and to assist with clearance of due diligence and legal documentation at various government levels both in the Republic of South Africa and Africa.

12. Encourage and obtain technical assistance from the major South African mining houses and research groups such as the Council for Geoscience, MINTEK, the universities, the CSIR and other institutes thereby promoting the interests of DDMI members.

13. Support the significant role that organizations such as the Council for Geoscience, MINTEK, the universities, the CSIR and other research organizations are capable of playing in developing and augmenting the exploitation of mineral resources.

14. Provide an international forum for the exhibition of diamond mining properties and exploration opportunities through the organization of an annual South African Developing Mining and Mineral Industry Exchange, which will be the premier Southern Hemisphere showcase for developers and investors in diamond mining and related minerals.

15. Afford mining equipment manufacturers, suppliers and service providers the opportunity to promote products and technical developments within the DDMI and encourage the use of the best technology available.

16. Represent the interests of the members of organizations at governmental level particularly with regard to trade, tenures and the transfer of funds, technology, equipment, training, skills and representation in other African countries.

17. Through membership of various Chambers, acquire for members of Kimberley Diamond Bourse benefits such as medical aid, pension protection, participation in wage negotiation, equitable employment practices as well as training of personnel if and when required.

18. Members undertake to share information on environment protection.

19. The creation of an ethical committee which will act to the benefit of members as to safeguard the national and international image of the diamond industry.

20. We will assist with AIDS I HIV programmes

3 Demindex / Kimberley Diamond Bourse (Pty) Ltd

OVERVIEW OF DIAMOND PROCESSIN(; IN.' SOUTH AFRICA

· South Africa is one of the largest producers of Gem quality diamonds.

· The country notwithstanding has failed to create a local economic added value scenario of substance.

· Pipeline development downstream is insignificant resulting in jobs loss, loss of revenue, no added value or income and general stagnation of development.

3 Demindex / Kimberley Diamond Bourse (Pty) Ltd

CAUSES OF THE FAILURE TO THRIVE AS A ADDED VALUE SCENARIO

· Unfair and unjust control by dominant players who influence key positions and decision making policies.

· Rough is controlled largely by international consortiums that have common cause.

· The peculiarity of Section 59 in terms of law in reference to a marginally profitable mine and the subsequent export of rough are to the detriment of the local industry.

4 Demindex / Kimberley Diamond Bourse (Pty) Ltd

LABOUR INVESTMENT IN THE INDUSTRY

· Will increase the added value of local manufacturing.

· Increase volumes of processing in the manufacturing diamond industry.

· Ripple effect into Labour and investment fields locally eg. tourism, jewelry manufacturing etc. etc.

· Increase Labour skills, higher earning value, higher spending capacity.

· Job creation has a definitive influence on crime prevention. Alleviate poverty and create local opportunity.

5. Demindex Kimberley Diamond Bourse (Pty) Ltd

PROBLEMS IN THE SOUTH AFRICAN DIAMOND INDUSTRY

1. Availability of finance (solution available)

2. Absence of permits (solution available)

3. Absence of added value (solution available)

4 Absence of secondary processing and pipeline development (solution available)

5. Lack of skills (solution available)

6. Possible lack of markets (solution available)

De Beers

Richmont

7. Van Cleef and Arpels, Cartier and Dunhill

8. Battle Ground Of De Beers + Le Viev Groups - African Governments Will Have To Act Strongly

6. Demindex / Kimberley Diamond Bourse (Pty) Ltd

REASONS FOR DENI INDEX! KIMBERLEY DIAMOND BOURSE (PTV) LTD TO SUPPORT THE BILL

· To add value, GDP and revenue locally.

· To assist the jewelry industry to launch itself as a serious competitor both nationally and internationally.

· Government to play impartial, uncorrupt and controlling lead in the just, fair and equitable distribution of a national resource.

· There is the potential of branding- all South African.

· Increase GDP revenue, create employment, skills and as such uplift the people of the country.

• Reduce poverty, crime and disease (HIV).

7 Dernindex / Kimberley Diamond Bourse (Pty)

70% 26% 50% 74% 74% 87% CHAIR 1.100%

DISINFORMATION ON THE SA DIAMOND INDUSTRY

· That South Africans cannot cut, polish and/or manufacture diamonds.

· That the style cut and general appearance of our product is not acceptable internationally.

· That our qualified cutters and manufactures cannot compete on a competence level internationally, or nationally, with foreigners.

· That the diamond industry adds most value to present empowerment and labour in the RSA.

· That the majority of produce is being cut locally.

· That it is not economically viable to cut and polish diamonds on the continent of Africa.

· That local industry cannot afford the incredible high prices and that this is more than likely to be disposed of to higher income and tolerance markets.

• Manufactures does not have the market, funds for holding cost or skills to sell their finished product offshore.

· Diamonds are cut cheaper in India or China (certain categories).

· Producing countries of diamonds should not become polisher or manufactures but should remain producers.

· That a state trades is a form of nationalization.

9 Demindex / Kimberley Diamond Bourse (Pty) Ltd

DEMINDEX'S PROPOSAL (BIJSINESS-PLAN)

· Bond Issuance 50 Million USS presently on BESA/JSE platform has been upgraded up to 1 Billion Rand. It will be the first Bond Listed in Dollar denomination.

· Turnaround the volumes to processing (20%) at the Kimberley Diamond Bourse and at Wolmaranstad

· To use the latest laser technology.

· Syllabii completed by Mr. Paul vd Merwe and T Benade and the possibility exist that it will be accredited to a existing Technicon or University to train students (3 years).

· The proposal is being submitted to SETA.

· Envisaged facilities will be in Kimberley and in Cape Town Investigation of a Brand outlet (nationally and internationally).

• Training of students with full government support and participation if possible.

10. Demindex / Kimberley Diamond Bourse (Pty) Lid

· Taking into account that Demindex represents excluded and disadvantaged members of the diamond industry, it is requested that Demindex forms part of the representation as provided for in section 6(3)(b) of the Bill (i.e. form part of the Board of the Regulator) and section 17(3)(b) (providing for the membership of the Board of the State Diamond Trader).

2. Section 17(f)(3)

· The process of obtaining investors and lenders provided for in s17(f)(3) should be transparent and their interest be made clear in order ensure that they do not waiver any influence over the Regulator and the State Diamond Trader.

3. Section 59(1)(b)

• Section 59(l)(b) should corrected to mean by "value

4. Section 32(1)

• Demindex welcomes the increase in the period of the validity of the license of the Diamond beneficiators.

5. Section 56A

· Demindex welcomes the requirement by section 56A that synthetic diamonds should be disclosed and as such provides protection for natural diamonds.

6. Section 59

· Demindex particularly supports the creation of a State Diamond Trader and the determination by the Minister of a percentage of diamonds produced in a production cycle that may be required for local beneficiation providing that the Kimberley Diamond Bourse (Pty) Ltd is not prejudiced in any form or manner..

· This section is an answer to the members of Demindex who are diamond benefiaciators; who have requesting access of rough diamonds.

7. Section 69

· It is submitted that the word "parcel" should be amended to "container" as the word parcel is commonly used in the diamond sector to mean diamond parcel.

8. VAT

· It is submitted that the turnaround time of VAT refund should be improved; it ties up the business's cash flow and makes it difficult for small players to run their businesses.

9. Section 62 (2) of Act 56 of 1986 - Export Duty

· Demindex supports to 15% export duty as levied by section 62(2;) of the Act 56 of 1986. The imposition of the export duty makes the rough diamonds available to the South African diamond industry before exporting without beneficiating, to other countries subject to the same access being affected to the Kimberley Diamond Bourse (Pty) Ltd's at all times.

10 Goods that are uneconomic to cut in SA

· It is proposed that the legislation should not differentiate between goods that are economic and uneconomic to cut in South Africa. This results in conditional cutting of goods. Whilst in the past some goods may have been termed uneconomic to cut in South Africa, it may well be that with the South African diamond industry there are people who can and are willing to cut these goods. This issue should be left to the discretion and capability of the industry.

11. S 59 of Act 56of l986

· It is submitted that section 59 dealing with agreements for supply of unpolished diamonds to cutters and tool-makers had been abused by the industry. Demindex supports it repeal.

12.Section 77 (a)

· A procedure that holds the majority equity in a Exchange Permit I License and the 26% or more in a cutting and manufacturing legal identity must be exemplar in section 77 (a) of the Bill.

13.Validity And Renewal Of Dealers Licences (Section 32)

· As primary beneficiaries, dealers should not be discriminated against and the period of licences must be in line with that of the diamond beneficiators.

· The renewal period for dealers' licenses should be 5 years.

· Temporary diamond buyers' permit should be limited to a period of 1 week instead of 1 month.

14.Systematic Diamonds (Section 56a)

· Definition of 'systematic diamonds' should include 'irreversibly treated diamonds in line with current trend of the world diamond market.

· It is proposed that a stringent version of section 40 be implemented or retained in the current act.

· Monies received in accordance with section 1 7(f)(3) should be in the form of state funds. The board should be seen to be independent, impartial and beyond influence.

16.Comments

· Section 40, 41, 42, 43 and 64 should not be repealed.

· Section 58 of the principal act should be re-instated as the beneficiators cannot cut and polish all diamonds.

17.Representation (section 17)

· Representation on the state diamond trader must be limited to south Africans only, but should be expanded to 18 members whereby the different interest groups and opinions can be heard.

18.Representation (section 6)

· Representation of the SA diamond regulator must be limited to South Africans only, but should be expanded to 18 members whereby the different interest groups and opinions can be heard.

19.Representation (section 17)

· Representation on the state diamond trader must be limited to South Africans only, but should be expanded to 18 members whereby the different interest groups and opinions can be heard.

20.Imported rough diamonds

· Demindex / Kimberley Diamond Bourse supports the government's endeavours to import rough diamonds from other countries, however, the Act does not make provisions for those rough diamonds to be re-exported without paying the 15% duty.

11. Demindex / Kimberley Diamond Bourse (Pty) Ltd

DEMINDEX / KINIBERLEY DDIAMOND BOURSE'S VISION

· Demindex Resources Corporation (SA) (Pty) Ltd the holding company of Kimberley Diamond Bourse (Pty) Ltd is to utilize its experience and support structure to maximize the value of rough diamonds in the Republic of South Africa and to encourage other African countries to do the same in terms of the NEPAD-plan.

· On listing of its Bonds it intends to mobilize its cutting and manufacturing facilities and create the required economic facilities to pursue the aims and objective of the New Bill.

· The group has proven capabilities, vast experience as producers and acts as an exchange. It has extensive knowledge of Africa and its needs and is quite independent of a dominant rough producer or financier. It does not fail in the knowledge of expertise and takes most kindly to the results of profitable systems.

· It has the financial capacity to implement its wishes and full corporate knowledge to raise whatever fund it may require.

12. Demindex Kimberley Diamond Bourse (Pty) Ltd

BREAKPOINTS AND WARRANTIES

· The state trading authority must be totally independent and funds must be supplied by the state.

· Percentage of control of rough must not harm existing exchanges.

· The development of a local diamond market.

· Creating, inviting and investment friendly diamond activity markets in the RSA.

· To assist short, medium and long term policy to enhance added value.

· To create an international and national markets.

· Support the implementation of the Bill.

13 Demindex / Kimberley Diamond Bourse (Pty) Ltd

· The Diamond Industry in the country is embattled to find a footing to move into the secondary and 3^rd phase resulting in polishing, cutting, jewelry manufacturing both nationally and internationally as well as branding.

· The RSA produces less than 1% of the worlds jewelry, but 20% of the global mineral related to jewelry manufacturing.

· The industry must set an achievable target and jointly work towards it.

· Government is committed and cannot withdraw from their mandate in terms legislation already passed in Parliament.

14. Demindex / Kimberley Diamond Bourse (Pty) Ltd

CONCLUSION

· The anticipated New Diamond Bill provides the stepstone of bringing South Africa to the frontiers of accountable capitalism, meeting its mandate in terms of its undertakings to the people of South Africa and correcting an artificial imbalance long being the subject of suspicion and jest.

· The mineral rights of South Africa are the underweighted balance sheet of the people of this country and it is time that they show the surplus of their loan accounts so long denied to them.

· The delay of the implementation of the New Bill will be justice delayed which we know is justice denied.