Company Information for Petra Diamonds Ltd

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AIM; PDL

Company Statement

Petra Diamonds is an international diamond mining group with a balanced portfolio combining major producing mines, world class exploration assets and a cutting and polishing business.

With operations in South Africa, Angola, Botswana and Sierra Leone, Petra’s objective is to continue to grow production, developing its stature as a leading diamond producer in all of the countries in which it operates.

In South Africa, Petra has four producing mines and recently reached agreements to acquire two further mines from De Beers (Cullinan and Kimberley Underground). The group is on track to increase its annual production and revenues substantially as the new mines come on stream.

Complementing the Group’s production is an exploration and development portfolio spread across some of the world’s most prospective diamond fields. In Angola, Petra is developing the world class Alto Cuilo and neighbouring Luangue projects. In Botswana, Petra has established the largest diamond exploration landholding in the country, where it believes that modern exploration techniques will hold the key to the discovery of new, major kimberlites. In Sierra Leone, Petra is developing a fissure operation with its JV partner Stellar Diamonds and test work to date indicates the potential for economic operations.

The Petra group now employs some 3,000 people and over the last 10 years the Company has developed a range of social initiatives which continue to make a meaningful impact upon the lives of employees and surrounding communities. Petra’s focus remains upon sustainable development, via educational programmes and skills transfer, to ensure a broad based approach with a lasting legacy, and all operations are carried out with the highest regard for the environment according to best practice.

Petra will only commit to working in countries which are members of the Kimberley Process and shareholders can remain assured that Petra’s diamonds will only ever be 100% conflict free.

Current Operations

South Africa
In South Africa, Petra currently operates four producing diamond mines: Koffiefontein, Helam, Sedibeng and Star. Koffiefontein is an underground kimberlite pipe mine, with the others being fissure operations. Petra completed the acquisition of the Koffiefontein mine from De Beers Consolidated Mines in July 2007. Shortly thereafter, the company also reached agreement to acquire a further two underground kimberlite mines from De Beers in South Africa, being Cullinan and Kimberley Underground Mines, each in a separate competitive tender process, and these acquisitions are expected to complete in 2008.

Cullinan
In November 2007, Petra entered into (as part of a Petra-led consortium) a landmark transaction to acquire the Cullinan diamond mine (“Cullinan”), from De Beers, for a total cash consideration of R1 billion. The acquisition is expected to complete by end July 2008 at which point Petra will immediately take over operation of the mine.

Cullinan (known as the Premier Mine until 2003) is renowned for producing many of the world’s largest and most famous diamonds, including the largest ever gem diamond, the Cullinan diamond at 3,106 carats rough, as well as more than a quarter of all diamonds weighing more than 400 carats. It also frequently yields diamonds larger than ten carats.

In the year to December 2006, De Beers produced 1.15 million carats at the mine, with a market value of R504.9 million (US$75.2million). According to Petra’s current mine plan, there are reserves and resources in place at the existing mine (excluding the Centenary-Cut resource) to support an additional mine life in excess of 20 years, yielding annual rough diamond production of in excess of 1 million carats.

Underneath the existing mining operations lies the Centenary Cut, or ‘C-Cut’ resource. Estimated at 133.1 million carats in-situ, the C-Cut is the world’s second largest diamond indicated resource. Whilst previous studies have indicated a high capital cost required to develop the C-Cut, Petra intends to consider new alternatives, such as a phased approach to development. There are also substantial tailings resources at Cullinan, incorporating both dumps and the higher grade optical sort tailings.

Koffiefontein Mine
In July 2007, Petra completed the acquisition of the Koffiefontein mine and having conducted care and maintenance activities at the mine in the 12 months prior to completion, was able to bring the mine on stream immediately. With modifications made by Petra to the plant and the mining process, the mine performance has been very effectively turned around and the operation is now profitable in Petra’s hands.

Prices achieved from Koffiefontein continue to surpass expectations. The average value per carat realised from the mine for the four months to end April 2008 has risen by 18.6% to US$484, compared to the value for the six months to end December 2007 of US$408 per carat. This increase is due in part to a strong market for diamonds, and particularly for the higher value goods which form a substantial part of Koffiefontein’s production. However, this also reflects the operational changes made under Petra’s management control, which continue to improve the mine’s economic performance.

US$484 per carat is exceptional for a kimberlite mine and places the value of Koffiefontein’s production amongst the world’s top kimberlite mines. Crucially, grade has not been sacrificed to achieve these prices, and the last reported grade of 8.2 carats per hundred tonnes continues to be met.

Kimberley Underground
In September 2007 Petra reached agreement to acquire the Kimberley Underground mines from De Beers. The acquisition is expected to complete in 2008. Based on historical production and sales information, Petra expects annual sales from Kimberley Underground in excess of 100,000 carats at an average of US$160 per carat once full production is recommenced, giving gross annual revenues in excess of US$16 million and a life of mine of at least 12 years.

Fissure Mines
The fissure mines (Helam, Sedibeng, Star) were acquired when Petra merged with ASX quoted Crown Diamonds NL in May 2005.

The nature of mining narrow-vein ‘fissure’ orebodies only allows for low-tonnage operations. In order to make such deposits economically viable, the former Crown group developed a low cost structure and specialist underground hard rock mining expertise, enabling the mines to stay open continuously throughout fluctuations in the capital markets and the diamond price. Central to this approach was the development of in-house expertise and the reluctance to use outside contractors, which served to significantly reduce capital expenditure costs. The business subsequently developed high quality internal skills set, covering areas including: exploration, manufacturing, engineering, plant design and underground mining.

The average value per carat at Petra’s three fissure mines is running at US$231 per carat for the four months to the end of April 2008 (compared to the value for the six months to the end of December 2007 of US$182 per carat).

Angola - Alto Cuilo
Alto Cuilo has been identified by analysts as one of the most exciting diamond exploration projects in development today worldwide. By air, Alto Cuilo is 700 kilometres south-east of the capital of Luanda, or 850 kilometres by road. It is 120 kilometres by road from Saurimo, the nearest main airport. The entire Alto Cuilo concession area covers 2,670 square kilometres.

Alto Cuilo is a major project with a large footprint (in excess of 1,500 hectares) and results continue to excite as the scope and scale of the project expands. A total of 249 anomalies have been identified across the licence area using Midas gradient array low level helicopter aeromagnetic survey.

To date the drilling programme has tested 99 priority targets of which 77 were confirmed to be kimberlites, an unusually high success rate in terms of kimberlite exploration. In 2007 mini bulk sampling (‘MBS’) of prioritised kimberlite targets at Alto Cuilo commenced and the first results, from kimberlites AC63 and AC98, have been encouraging with the intersection of high grade areas.

Previously a joint venture with BHP Billiton, in May 2008, BHP Billiton advised Petra that it is transferring to Petra and it was agreed that the date of this handover is retrospective, taking effect from 31 March 2008. Petra is now the sole operator and funder of the development of Alto Cuilo.

The work programme is currently being fast tracked and is highly focused on specific areas of interest, being the near-surface crater rim resedimented volcaniclasic kimberlite deposits where highly encouraging exploration results have been recorded. Petra believes that the crater rims have the potential to contain substantial deposits of economic diamond-bearing material, as is the case at other diamond mines with similar mineralisation, such as Catoca in Angola and Williamson in Tanzania.

From the entire Alto Cuilo area of 2,670km², Petra’s has identified an area of 276km² (23km by 12km) for the revised work programme. This smaller area hosts 51 kimberlites of which eight (based on Petra’s re-ranking following a review of the exploration data) will be targeted for the accelerated work programme. These kimberlites form a cluster and one or more of these targets could be mined individually or together utilising a central process plant. The eight kimberlites targeted by Petra range from an estimated 30 to 180 hectares in surface area and should the RVK of any of these targets be shown to hold economic grade, it is entirely feasible that a substantial mine could be hosted at Alto Cuilo.

Angola – Luangue
In March 2007 Petra Diamonds acquired Frannor Investments & Finance Ltd ("Frannor") from Xceldiam Limited and thereby acquired an interest in the Luangue project, which shares a common boundary with Alto Cuilo.
In December 2007, a low level aero magnetic survey was completed over the Luangue concession. The results of this survey, released in May 2008, were highly encouraging with 138 anomalies identified. The total surface area of the targets is in excess of 8,000 hectares*, with certain individual targets are up to 233 hectares* in surface area. Five of these targets have already been drill confirmed as kimberlite and Petra now plans to start an initial drilling campaign at Luangue within two months.

As at Alto Cuilo, the work programme at Luangue will focus on proving up the potential of enriched near-surface RVK deposits, which have been shown by exploration at Alto Cuilo to be the areas most likely to host economic mineralisation. Preliminary modeling carried out by Xcalibur Geophysics on the high resolution magnetic data for five of the high priority targets indicates cover of less than 50 metres at the shallowest point. This is supported by drilling at known kimberlites on Luangue, which have been intersected within 30 metres of surface.

Botswana - Kalahari
In September 2005, Petra acquired 100% of Kalahari Diamonds Limited and subsequently became the holder of the largest area under diamond prospecting licence in Botswana, currently approximately 52,000km², all of which is “on craton”. There are 34 known kimberlites in Petra’s licence areas, including two diamondiferous kimberlites in the vicinity of the major Jwaneng diamond mine, and other highly prospective anomalies for further investigation.

In 2008, Petra will be continuing its focused exploration programme. A 57,000 line kilometre low level, gradient array magnetic survey has been commissioned over the Kukama project and a 5,000 metre drilling programme has been commissioned to test anomalies detected in our Orapa North, Gope, Kukama and Mabutsane project areas. Additional drilling will be scheduled to test the kimberlites in the Jwaneng and Kukama areas, as well as the largest kimberlite in the Kikao field, which is 700 metres in diameter.

The next phase of the exploration programme is a 3,000 to 5,000 metre drilling programme which will commence shortly in the Gope East, Gope West and Kukama project areas. This programme will target new anomalies as well as definition drilling on known kimberlites such as kimberlite 173S in the Kukama area that is now, on new data, interpreted to be 25 hectares in surface area.

Sierra Leone - Kono
Kono is a kimberlite project with several identified fissures and is at an advanced stage of development. Trial mining is currently underway and two shafts are being developed, Pol-K and Bardu, and processing of exploration and development material to date has yielded 12,132 diamonds, weighing a total of 1,049 carats.

In August 2008 the first sales of diamonds from the Kono project will be made, when a parcel of approximately 800 carats from the Pol-K shaft will be placed on tender. This sale will give an indication of the average carat value. A second tender, comprising diamonds from the first Pol-K trial stope, is scheduled for October 2008.

As diamond production from the trial mining stopes increases over the coming months, revenues from diamond sales are expected to generate regular income to offset against total development expenditure.

CALIBRATED DIAMONDS
In November 2006, Petra made a strategic move into the cutting and polishing (’beneficiation’) of diamonds with the acquisition of Calibrated Diamonds Investments Holding Limited (“Calibrated Diamonds”). This acquisition gives Petra the in-house capability to cut and polish its own rough diamond production, which in turn will directly impact Petra’s bottom line given the value uplift in a polished stone compared to the rough form.

Calibrated Diamonds’ proprietary laser cutting process has significant advantages over traditional cutting and polishing methodology, producing stones to a very high and consistent standard. Calibrated Diamonds’ cut and polished stones are a premium product, producing the highly sought after ‘hearts and arrows’ quality which is rarely achieved by conventional means.

Production build is now underway and it is expected that 2,500 carats per month rough will be processed by mid 2008.

Brokers Research and Price Targets

BMO Capital Markets	13/05/2008	200p
Collins Stewart	14/05/2008	220p
Natixis Blochreider	21/02/2008	240p
RBC Capital Markets	15/04/2008	160p

Geographical Spread

Board of Directors and Key Management

The board and management of Petra Diamonds are well qualified and experienced in the technical aspects of diamond mining and exploration as well as corporate affairs.

Adonis Pouroulis, Executive Chairman

Johan Dippenaar, Chief Executive Officer

David Abery, Finance Director

Jim Davidson, Technical Director

Charles Segall, Non-Executive Director

Volker Ruffer, Non-Executive Director

Company Address

Elizabeth House
9 Castle Street
St. Helier, JE4 2QP


Telephone:	+44 1534 700 111
Facsimile:	+44 1534 700 007
Email:	info[at]petradiamonds.com
Website:	http://www.petradiamonds.com

Additional Address/Key Contact

Company Registration Number EC23123, incorporated in Bermuda

Contact:
Cathy Malins, Corporate Communications Manager, Petra Diamonds
Tel: +44 20 7318 0452
cathym@petradiamonds.com

Annual General Meeting

November 2008

Year End

30 June

Nominated Brokers

Collins Stewart
9th Floor
88 Wood Street
EC2V 7QR

BMO Capital Markets
95 Queen Victoria Street
London
EC4V 4HG

Nominated Advisors

Collins Stewart

Major Shareholders

Saad Investments Company Limited	28.70
JP Morgan Asset Management U.K. Limited	11.49
Al Rajhi Holdings W.L.L.	8.02
Photon Global Limited	7.0
Adonis Pouroulis (Chairman)	4.1

Most Recent Statement

19/06/08 - Sierra Leone - Kono update
09/06/08 - Directors' Dealings
06/06/08 - Cullinan Acquisition Update - Ministerial consent granted
13/05/08 - Angola - Petra to assume control of Alto Cuilo and Luangue & South Africa - diamond prices surpassing expectations and Cullinan acquisition on track
19/02/08 - Cullinan Diamond Mine – Competition Commission Approval
19/02/08 - Interim Results – Profit of US$8.2m

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