musings, page-20

I don't hold KIM but have had it on my watch list for a long time. I think it has a lot of option value from upside from a. exploration, b. increased marketing and c. a recovery in world diamond prices. I held off buying because of the effects of the Aussie $.

I think GEM Diamonds are doing to KIM what Extracta did to MIM a few years back. They got a bargain by buying it at the right time before metal and coal prices rose. I refer you to the BHP website for their presentation on the outlook for the Diamond industry. They predict higher demand and from China and India and falling production from reduced mine output leading to higher diamond prices.

It is probably a bit late to make a suggestion. However, if KIM is experiencing shortterm financial problems, could they not improve their position by mining and processing the E9 pipe instead of the E4. The E9 pipe has a ore value of about $5 per tonne greater than the E4 pipe. The E4 plant has an annual target of 4.4 million tonnes pa. Processing E9 ore through the E4 plant would increase revenue by $22 million. The offset would be the cost of transporting the 4.4 million tonnes the 25 kms to the E4 plant. Just a suggestion a shareholder may want to suggest to the company.

The E9 resource was just upgraded by 41%. Mining it for both plants would deplete the ore much quicker. However, if it is to get KIM out of short term difficulties it could do so for 1 or 2 years, the equivalent of the 41% upgrade.

Just a suggestion for discussion.

Regards

SP