Operational Update June 2012

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Dwain Webster
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1 Operational Update June 2012

Disclaimer The content of information contained in this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ( FSMA ).

2 Disclaimer The content of information contained in this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ( FSMA ). Reliance upon this Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. If any person is in any doubt as to the contents of this Presentation, they should seek independent advice from a person who is authorised for the purposes of FSMA and who specialises in advising in investments of this kind. This Presentation is being supplied to you solely for your information. While the information contained herein has been prepared in good faith, neither Botswana Diamonds ( Company ) nor its shareholders, directors, officers, agents, employees or advisers give, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers and liability therefore is expressly disclaimed. This Presentation does not constitute, or form part of, an admission document, listing particulars or a prospectus relating to the Company, nor does it constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company nor shall it or any part of 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 therefore. Recipients of this Presentation who decide to subscribe for, or purchase, ordinary shares in the Company following the publication of the final document relating to the proposed Admission (the Admission Document ) are reminded that any application so to subscribe for or purchase may only be made on the basis of the information contained in the Admission Document which may be different from the information contained in this Presentation and will contain additional information. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its completeness, accuracy or fairness thereof, nor is any responsibility accepted for any errors, misstatements in, or omission from, this Presentation or any direct or consequential loss however arising from any use of, or reliance on, this Presentation or otherwise in connection with it. By accepting this Presentation you confirm, represent and warrant that you have consented to receive inside information (as defined in the Criminal Justice Act 1993 and the Financial Services and Markets Act 2000 (as amended) (the Acts )), and you agree not to deal in any securities of the Company until such time as such inside information has been made public and until such time that the Placing has been publicly announced by the Company or the Company decides not to proceed with the Placing. This Presentation may not be reproduced or redistributed, in whole or in part, to any other person, or published, in whole or in part, for any purpose without the prior consent of the Company. The contents of this Presentation are confidential and are subject to updating, completion, revision, further verification and amendment without notice. The Presentation is being distributed on request only to, and is directed at, authorised persons or exempt persons within the meaning of FSMA or any order made there under or to those persons falling within the following articles of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the Financial Promotion Order ): Investment Professionals (as defined in Article 19(5)) and High Net Worth Companies (as defined in Article 49(2)). Persons who do not fall within any of these definitions should not rely on this Presentation nor take any action upon it but should return it immediately to the Company. This Presentation is exempt from the general restriction in section 21 of FSMA relating to the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to certain categories of persons. 2

3 Disclaimer Neither this Presentation nor any copy of it should be distributed, directly or indirectly, by any means (including electronic transmission) to any persons with addresses in the United States of America (or any of its territories or possessions) (together, the US ), Canada, Japan, Australia, the Republic of South Africa or the Republic of Ireland, or to any corporation, partnership or other entity created or organised under the laws thereof, or in any other country outside the United Kingdom where such distribution may lead to a breach of any legal or regulatory requirement. The recipients should inform themselves about and observe any such requirements or relationship. The Company s ordinary shares have not been, and are not expected to be, registered under the United States Securities Act 1933, as amended, (the US Securities Act ) or under the securities laws of any other jurisdiction, and are not being offered or sold, directly or indirectly, within or into the US, Canada, Japan, Australia, the Republic of South Africa or the Republic of Ireland or to, or for the account or benefit of, any US persons or any national, citizen or resident of the US, Canada, Japan, Australia, the Republic of South Africa or the Republic of Ireland, unless such offer or sale would qualify for an exemption from registration under the US Securities Act and/or any other applicable securities laws. Forward-looking Statements This Presentation or documents referred to in it contain forward-looking statements. These statements relate to the future prospects developments and business strategies of the Company and its subsidiaries (the Group ). Forward-looking statements are identified by the use of such terms as believe, could, envisage, estimate, potential, intend, may, plan, will or the negative of those, variations or comparable expressions, including references to assumptions. The forward-looking statements contained in this Presentation are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialises, or if underlying assumptions prove incorrect, the Group s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements. These forward-looking statements speak only as at the date of this Presentation. No undertaking, representation, warranty or other assurance, expressed or implied, is made or given by or on behalf of the Company, any of their respective directors, officers, partners, employees or advisers or any other person as to the accuracy or the completeness of the information or opinions contained herein and to the extent permitted by law no responsibility or liability is accepted by any of them for any such information or opinions. Notwithstanding the aforesaid, nothing in this paragraph shall exclude liability for any representation or warranty made fraudulently. 3

4 Company Synopsis Botswana Diamonds (BOD) is an AIM and Botswana listed company with exploration/development projects located in the best diamond address in the world Botswana, as well as projects in Cameroon and Zimbabwe; JV with diamond major in Botswana; Significant upside in Mobilong exploration licence in Cameroon - Diamond bearing rock type found. Sampling underway; Operating in Zimbabwe with interests in Marange and Chimanimani; Experienced successful team. 4

5 Corporate Listed on AIM February 2011 Listed on Botswana Stock Exchange June 2011 Market capitalisation of 3.0m Shares in issue m Cash in hand $1.2M Directors/Management team hold a 25% interest Nomad: Westhouse Broker: London - Westhouse Botswana Capital Securities 5

6 Diamond Market Chinese and Indian demand will continue to support the market for the foreseeable future. By 2020 China & India combined will be the worlds largest market at 40% Rough & polished prices hit new highs in 2011; Current correction short term. Polished prices currently -6.4% y-0-y and -4.3% since January Current mines are ageing, there are few new discoveries, so a significant supply shortfall from 2015 should drive prices. It is believed that there will be fewer than 15 producing kimberlite mines in the world by Global rough demand to grow by 6.6% p.a. until 2020 up to $23bn 6

7 Diamond Market Source: Bain report, December

8 Diamond Market by Country ($bn.) Source: Bain report, December

9 Diamond Market Source: RBC Capital Markets, September 2010 Source: Bain report, December

10 BOD Activities Botswana: An active 50/50 joint venture with a major using new technology to identify large diamondiferious kimberlites in the Orapa area. A highly prospective 262 sq km exploration licence owned 100% by BOD. Cameroon: A palaeoplacer deposit discovered in the Libongo area of Cameroon adjacent to the new Mobilong mine. Sampling is ongoing. Zimbabwe: A Production Sharing Agreement with a local group over a 4,000 hectare concession in Chimanimani. BOD has discovered diamonds on the ground. Marange application Kimberlite claims Corporate: Examining opportunities elsewhere in Africa. 10

11 Botswana: The Best Address in Diamonds Botswana, the Switzerland of Africa One of the best addresses to do business in; Largest diamond producer by value in the world. Orapa is the 2 nd largest diamond mine in the world. Jwaneng is the richest mine in the world, with a Profit/Revenue ratio in excess of 80%. The Karowe mine came on stream in May 2012 at 1 million carats a year, including high value Type 2. The Botswana Diamonds team established African Diamonds in 2002, which discovered the Karowe mine in Orapa. The company was sold to Lucara (TSX: LUC) in December

12 Botswana PL170/2012 Kaapvaal Craton This highly prospective 262 sq km block was awarded to BOD in May km from the Orapa mine but part of the Orapa kimberlite cluster. On the Kaapvaal craton with up to 60m of sand. Held for decades by De Beers (Area D). They explored lightly but ineffectively. Modern techniques are more precise. High resolution geophysics will commence immediately followed by percussion drilling. The geology is similar to that at the Gope Mine of Gem Diamonds and the recent Petra discovery X36. 12

13 Botswana PL170/2012 Kaapvaal Craton

14 Botswana: Joint Venture JV with diamond major. The major holds a proven technology which will be used in Botswana for the first time; Initial area of interest NW territory of Botswana, New approach to traditional areas, Significant upside in difficult, underexplored areas. Secondary analysis and targeting followed by prospecting; Geophysical data being processed. Gathering geochemical data; First results due Qtr Following which new ground will be applied for on a 50/50 heads up basis. 14

15 Botswana: Areas of Joint Venture Interest 15

Cameroon: Mobilong Diamondfields A new diamond field is emerging in east Cameroon; Diamonds are hosted in palaeoconglomerate deposit, similar to Marange in Zimbabwe; C&K Licence Area CNK Mining

16 Cameroon: Mobilong Diamondfields A new diamond field is emerging in east Cameroon; Diamonds are hosted in palaeoconglomerate deposit, similar to Marange in Zimbabwe; C&K Licence Area CNK Mining (Korean) are constructing a 1 million carat p.a. mine in Mobilong adjacent to BOD licence; Botswana Diamonds has 8,087 sq.km license adjacent to the Korean license; 480sq km of the license has been upgraded to Exploration License - Terms are 4 years with renewals. BOD Licence Area Initial Area of Focus 16

recovered from streams in area of palaeo-conglomerate outcrop; Evidence of artisanal workings in area; Three 100 tonne bulk samples are

17 Cameroon: Libongo Licence 2011 reconnaissance exploration programme identified several outcrops of palaeo-conglomerate; Initial work shows that palaeoconglomerate is similar to that of CNK diamond occurrence next door and covers an extensive area; Diamonds were recovered from streams in area of palaeo-conglomerate outcrop; Evidence of artisanal workings in area; Three 100 tonne bulk samples are being analysed to confirm presence of diamonds. Results Q3 2012; This will be followed by larger sample to estimate grade and quality (Q1 2013).

18 Zimbabwe: Emerging Diamond Powerhouse It is likely that Zimbabwe will be in the top 2 diamond producers within a couple of years. Significant uncertainty but the country is well open for development. Currently sanctions apply to many diamond operators but it is expected that they will be removed shortly. Project Areas 18

19 Zimbabwe: Diamond Powerhouse Areas of Interest: Chimanimani: Emerging palaeoplacer. BOD was an early mover here with a licence which was withdrawn. The BOD discovery is a palaeoplacer deposit of unknown size with lower grades but higher value diamonds. Marange: The 250,000 sq hectare area is a palaeoplacer diamond discovery with grades of up to 8,000 cpht the highest in the world. Diamonds are worth about $40 a carat. Kimberlites: Zimbabwe holds numerous kimberlites. There is a producing Rio mine, Murowa, which is for sale. BOD has sampled two sets of kimberlites with non commercial results. 19

20 Zimbabwe: Chimanimani BOD prospected the Chimanimani area in 2009/10 as African Diamonds. They entered into a joint venture with locals, began construction of a trial mine. The licence was summarily withdrawn in A licence over 4,000 hectares in Chimanimani covering gold and diamonds has recently been issued to a local Zim group. They in turn have a Production Sharing Agreement with BOD whereby BOD will explore, build and manage in return for 25% of revenue. First step is to trial mine to estimate grade and value. Most of the equipment is in the country. Timing: Q

21 Zimbabwe: Marange Probably the biggest diamond field in the world with grades of up to 8,000 cpht. Fraught with political intrigue. Currently subject to sanctions. Prior to the current difficulties BOD entered into a 50/50 joint venture contract with Farmers World, a local group, to apply for a Marange block After significant work Block J was awarded to CEBOA and ZMDC, the Zim state mining company. This in turn is a 50/50 joint venture. So the net position is a 25% interest to BOD. Approval is required from the President. We still await a response. Issues concerning fees and signature bonuses still are outstanding. 21

The Team John Teeling (66) - Executive Chairman 30 years resources experience.

Established a number of AIM companies. Doctorate from Harvard.

Currently Director of 4 AIM companies. Degrees in Accounting and Management.

He is Managing Director of AIM listed oil explorer Petrel Resources plc and Clontarf Energy plc.

22 The Team John Teeling (66) - Executive Chairman 30 years resources experience. 20 years African Resource exploration and development management experience. Established a number of AIM companies. Doctorate from Harvard. James Finn (52) Finance Director 20 years experience in exploration companies. Currently Director of 4 AIM companies. Degrees in Accounting and Management. David Horgan (52) Director Holds a Law degree from Cambridge and an MBA from Harvard. He is Managing Director of AIM listed oil explorer Petrel Resources plc and Clontarf Energy plc. Robert Bouquet (41) Director 16 years' experience in diamond industry, 14 of which with De Beers and Rio Tinto Diamonds in a variety of strategic and commercial roles Experience in diamond producer countries, particularly in Africa as well as in all diamond cutting centres Degree in Management and French 22

com www.botswanadiamonds.co.uk Email: Info@botswanadiamondsplc.

23 Contact Details 162 Clontarf Road Clontarf Dublin 3 Ph: Web: Info@botswanadiamondsplc.com info@botswanadiamonds.co.uk 23

24 Appendix: Evolution Of The Earth Crudely concentric structure Crust Solid lower and upper mantle Liquid outer core Solid inner core 24

25 Appendix: Eruption Of A Kimberlite Volcano Crater Diatreme Xenoliths Root 25 of 27 25

26 Appendix: Diamondiferous Kimberlites mobile belt craton lithosphere diamond stability zone 26

27 Appendix: Diamond Deposits 27 of 27 27

28 Appendix: Global Diamond Deposits 28

Karelian Diamond Resources

Karelian Diamond Resources AIM: KDR www.kareliandiamondresources.com DISCLAIMER This Document comprises an institutional presentation (the Presentation ) which has been prepared by and is the sole responsibility