DIAMOND VENTURE – ZIMBABWE February 2011 Parties and Purpose A contract of co-operation concerning diamond processing in Zimbabwe was signed between two parties on January 20th 2011, in Johannesburg.  The first party, representing the Zimbabwe group, is led by N B (Billy) Tanhira (henceforth referred to as Zimgroup). This group having secured the rights to cut & polish uncut diamonds, mined in Zimbabwe.  The second party, being the external group providing skills and capital, is led by Louis Liebenberg (henceforth referred to as Ingroup). The co-operation contract outlines a business venture (named EARLSPORT (Pvt) Ltd.) involving the purchase and processing of diamonds in Zimbabwe. The cut and polished product are to be marketed through an external entity, wholly owned by the Ingroup. The representatives of the parties are responsible for the allocation of shares (and/or profits) to the members of each group and will record such arrangements by way of formal agreements. This documents sets out information regarding the operation in broad detail. Zimgroup This group through well-established connections (secured by Government contract, copy attached) has been allocated up to 30 000 carats of uncut diamonds per month. The rights are considerably greater than the volume that is proposed to be processed (10 000 carats per month). It is anticipated that future growth and profitability may lead to further expansion of the Zimbabwe operation. Zimgroup has already acquired approved premises, obtained all necessary licences and authorities in order to commence business. The corporate shell has been formed and 49% is granted to the Investors group (retention of 51% due to the government policy in Zimbabwe). Obligations for the Ingroup, the 49% allocation The Ingroup is to provide all the necessary skills and capital required to fund equipment and operations. The operation should commence by June 1st 2011. The required equipment has been sourced and costed. All relevant skills in regard to the establishment and operation of the diamond processing operation have been assembled and are ready to commence after the raising of the additional capital requirements by way of € 6 000 000 (six million Euros of which 90% of this amount is in the form of a debenture). Loan capital is to carry interest at 15% per annum paid monthly in arrears with capital repayments in 12 equal instalments commencing in month 13. Just over 25% of the capital is allocated to capital expenditure (including freight and duties), the balance for funding stock purchases, cash flow requirements and appropriate reserves. Zimbabwe Diamond Opportunity February 2011 Page 1 of 6 Ingroup Structure and Income The collective interests of Ingroup are to be held in a company (to be formed), registered in Malta. The location was chosen for various reasons, including being investor friendly, proximity to markets and stable EEC member. The forecast returns of the operation are derived, in the first place from dividends paid from Zimbabwe. Of greater significance is the benefit derived from the resale of finished product to the primary diamond Markets in Europe and the Middle East. Further information of interest to Investors Key business assumptions The Zimbabwe Operation is based on the following primary assumptions:  Cost of raw material (uncut stones) per carat $450 (E330)  Recovery in cut and polished form 45%  Average sale price per carat (% of Rappaport) 50%  On given quality, per carat, this equates to $1 500 (E 1 103)  Resale of finished goods (% of Rappaport) 55% The financial model is structured on starting with just 2 000 carats in the first month, building up to 10 000 carats in the 9th month of operation. The model further anticipates that the current month’s production will be sold in the following month and that the cash proceeds will be received the month after sale. (In practice all diamond deals are cash on delivery). Capital Equipment & operations The equipment (sourced mainly from India) is essentially an automated unit that assesses each raw stone to derive maximum value in cut from. The machine further cuts the facets with lasers and final polishing is done by labour. The suppliers will supply fifteen staff members to commission their equipment on site. Those same people will and then operate and train Zimbabwean staff for the first 12 months of operations. Cost of salary, subsidence travel and accommodation for the visitors are to be paid by EARLSPORT Profitability and Dividend Policy Malta Given that the “best price” available in the trade is Rappaport less 35% there is considerable upside profit potential, sales based on 55% (45% discount). If the margin derived by the Malta Company is just $90 per carat ($150 less an overhead of $60 for all expenses, taxes and commissions) then the dividend income there for the shareholders is over 100% per annum on the original share capital. Dividend policy is set at 60% of the retained income and payable as per directors resolution (nominally annually, but could be as frequent as monthly). Zimbabwe Diamond Opportunity February 2011 Page 2 of 6 Pricing & Dividend Policy, EARLSPORT (the Zimbabwe operation) The cost of raw material and the sale value have been based on a particular quality of stock and the corresponding Rappaport prices. The cost of uncut stones used in this model ($450 per carat) is considerably higher than the average for government sales achieved over the past few months (has been less than $100 per carat). The assumption used here is based on good average sizes and quality. The recovery rate of 45% (loss by cutting) means that the net cost of material for cut and polished stone is $1 000 per carat. By selling to the INGROUP at $1500 per carat there is a gross margin of $500, reduced to ($402 net of overheads and interest). Dividend policy is set at 35% of retained income for a period 4 months prior to the date of distribution. This is somewhat conservative but allows for the slow build-up of stock and reserves. Other Personnel matters Overall management and control will be provided for by experienced personnel from South Africa. Naturally this will include security and full day to day control. Provision has been made to purchase a modest residence that will be used to house the Indian staff as well as those on assignment from South Africa Risk Any investment carries risk and Africa more than most! Perhaps the most important protection for Ingroup investors is the fact that the total capital at risk can be exported in a single briefcase. As early as month six the value of receivables and stock on hand easily exceeds the total investment. Summary of proposal (showing results for € 200 000 gross investment) The whole investment opportunity available is € 6 000 000. Applicants are invited to contact our representative in Italy, Salvatore Ferrante. Pina Ferrante Chairperson AFRICAN DUNE (PTY) LTD. Zimbabwe Diamond Opportunity February 2011 Page 3 of 6 Manufacturing Machinery OGI Machine Laser Machine with loaded tray Laser Cutting Process with Visual Control Zimbabwe Diamond Opportunity February 2011 Page 4 of 6 One of four Brillianteers at the table Brillianteer at his polishing table Zimbabwe Diamond Opportunity February 2011 Page 5 of 6 Automatic Polishing Table Negotiations in regard to Contract January 19th 2011 The signing of the contract January 20th 2011. Louis Liebenberg for the Ingroup and Billy Tanhira for the Zimbabwe rights holders Zimbabwe Diamond Opportunity February 2011 Page 6 of 6