Letseng CEO responds

Mr. David McKay.

Mining Editor: Finweek and Miningmx.com

4 October 2005.

Dear Mr McKay

I write concerning your article in the 5 October issue of Finweek, “Brett Kebble. Secrets go to the grave’ which also appeared on the miningmx website, in which you give credibility to a theory that “JCI’s Letseng diamond mine in Lesotho’ is being used to “wash smuggled gems’ of Angolan origin.

The article goes on to quote diamantaires as saying that “Letseng normally produces few – but large – diamonds. The recent run of mine production has been quite different.’

As Chief Executive Officer of the Lesotho mining company, Letseng Diamonds, I wish to state some verifiable facts in order to set the record straight.

Firstly, the Letseng mine is not JCI’s, they and JCI controlled Matodzi Resources own only 68%.of the mine. With the Lesotho Government holding 24% of the Company, and with all of the profits so far, 18 months from start-up, being used to repay loans to the Industrial Development Corporation, I would think that the Letseng mine is anything but an effective vehicle for laundering somebody else’s diamonds. In any case, with a production of 4 000 carats a month, of which only 3% comprise stones greater than 50 carats, – it is more a “trickle’ than your quoted “stream’ – there’s not much volume available for a meaningful scale of laundering.

Secondly, I joined De Beers in 1973 to conduct their feasibility into opening the mine and was their mine manager for nine out of the ten years for which it operated, during which time 270 000 carats were produced. I can categorically state that the 57 000 carats which Letseng has produced to date, albeit at a lower grade per ton than De Beers, exactly match their production, in terms of diamond size distributions and more significantly, has identical proportional revenues for each diamond size. It is significant that despite the probability of transfer pricing practices being applied during this period, the 270 000 carats were sold between 1977 and 1982 for an average price in excess of $400 per carat, an incredible value at that time for a run of mine production.

As the author of several technical papers on diamond morphology, and having at various times examined more than 100 000 carats of Angolan production, I can further categorically state that large Angolan diamonds in any one of our parcels would stand out like proverbial dogs balls on a parrot!

Thirdly, Lesotho’s accreditation in terms of the Kimberley Process is obviously jealously guarded by the Government, particularly in view of their recent re-emergence as a diamond producer with two mines already in production. The Mine is under continuous scrutiny by Government representatives who monitor the entire recovery phase, seal and certificate the goods in terms of the Kimberley Process and track them through to Antwerp and their sale by tender by Letseng’s agents, WWW Diamond Consultants Limited.

I am unaware of any reluctance on the part of Antwerp diamantaires to “accept parcels of unpolished diamonds from Letseng’, which you state not as theory but as fact. On the contrary, we have to strictly limit the number of tenderers in order to complete the tendering within five days.

All in all, your article falls dismally short of the standards of reporting which I would expect from a periodical such as Finweek. Surely it is not the magazine’s norm to quote malicious gossip without any effort to verify the allegations?

Your article is obviously potentially damaging to the reputations of the Mining Company and the Lesotho Government and by failing to make even the most cursory enquiries, I regard you as personally responsible for propogating these slanderous remarks. In order to remedy this situation, I request that my letter be published in the next issue of Finweek and that it be immediately copied on the miningmx web site.

In the event that you do not comply with my request, Letseng Diamonds (Pty) Ltd. reserves the right to take whatever action is deemed necessary to clear its name.

Yours faithfully,

Chief Executive Officer.