Agreement with Xceldiam

Petra Diamonds Ld
30 May 2006


                               JOINT NEWS RELEASE


30 May 2006

                  Xceldiam Limited and Petra Diamonds Limited

                        Strategic Cooperation Agreement



Xceldiam Limited ('Xceldiam') (AIM: XLD) and Petra Diamonds Limited ('Petra')
(AIM / ASX: PDL), the diamond mining and exploration groups, announce that they
have entered into a strategic cooperation agreement (the 'Agreement') with
regards to the Luangue and Alto Cuilo diamond exploration projects ('Project
Luangue' and 'Project Alto Cuilo') in north-eastern Angola.


Highlights:



O      Xceldiam and Petra believe that Project Luangue may host kimberlite
geology similar to that of Project Alto Cuilo, where exceptional exploration
progress has been announced. The projects share a common border and it is the
area within 20 kilometres either side of this common border that each project
is, based on geology and diamond prospectivity, focusing its exploration
activities.



O      Exploration and mineralogy activities carried out at Project Luangue
support the possible presence of kimberlitic clusters in the area immediately
north of the common boundary between the Alto Cuilo and Luangue project areas.
At Luangue, over 70 prospective kimberlitic type anomalies have been identified
so far, with 20 of these kimberlitic anomalies having been prioritised for
drilling. At Alto Cuilo, in the area immediately south of the common border, 38
kimberlitic occurrences have been identified and drilled to date with an
estimated surface area of approximately 1,437 hectares.



O      Xceldiam and Petra will share information and cooperate on technical,
operational and other related matters with regards to the development of Project
Luangue and Project Alto Cuilo. Bearing in mind the likely contiguous underlying
geology of the Projects and consequent kimberlite mineralogical similarities,
accelerating the exploration efforts on kimberlite targets at Project Luangue is
expected to result in significant cost and time benefits.



O      The comparison and profiling of the mineralogy of kimberlitic occurrences
which are expected to be identified at Project Luangue against the Project Alto
Cuilo kimberlitic occurrences that have already been identified is expected to
enable Xceldiam to accelerate assessment and development of the Project Luangue
targets. As detailed information on diamond content emerges later this year on
the Project Alto Cuilo kimberlitic occurrences from large diameter drilling ('
LDD') and bulk sampling, this will significantly enhance the selection and
prioritisation of LDD targets at Project Luangue following the less expensive
small diameter drilling programme which will commence shortly.



O      As part of the Agreement, Petra has been granted warrants with a total
exercise price of £14 million (the 'Cooperation Warrants') to acquire up to 26%
of the issued share capital of Xceldiam's wholly owned subsidiary, Frannor
Investment and Finance Limited ('Frannor'), which holds Xceldiam's interest in
Project Luangue. Funds paid to Frannor on exercise of the Cooperation Warrants
will be ring-fenced to further develop Project Luangue. There is no other
financial consideration payable by either party with regards to the Agreement
and Cooperation Warrants.



O      As part of the Agreement, Petra has also been granted a right of first
refusal to participate in any disposal, transaction or joint venture concerning
Xceldiam's interest in Frannor (subject to the rights of the Angolan state).The
right of first refusal remains in place whilst the Petra and Xceldiam continue
their strategic cooperation and is independent of the exercise of the
Cooperation Warrants, unless Petra has not exercised any Cooperation Warrants by
31 December 2008, at which time it will lapse.





Background and Terms of the Agreement



Project Alto Cuilo and Project Luangue are situated in a highly prospective
diamond area of north east Angola. The project areas share a common border, with
Project Luangue being directly north of Project Alto Cuilo. Xceldiam and Petra
consider that there is potential for the geology of the northern part of Alto
Cuilo, the area which has so far led to exceptional exploration developments, to
continue into the Project Luangue area.



Under the terms of the Agreement, Xceldiam and Petra will share information and
cooperate with the objective of accelerating the pace of geological
understanding and bringing to account potential diamondiferous ore bodies at
Project Luangue. Exploration at Project Alto Cuilo has been fully underway since
2003 and given the proximity and the substantial amount of progress that has
been made at this project, Xceldiam and Petra anticipate that their strategic
cooperation will greatly assist with the assessment and interpretation of
geological information at Project Luangue.



As required under the terms of the Project Luangue and Project Alto Cuilo
exploration contracts, Xceldiam and Petra will work closely with Endiama, the
Angolan government diamond body, with regards to the sharing of information and
other matters relating to both projects.



The strategic cooperation is expected to fast-track exploration developments at
Project Luangue and is also expected to reduce costs in many areas, thus
accelerating the progress towards feasibility studies.



As part of the Agreement:



(i)                          Petra has the right to invest, by way of the
Cooperation Warrants, up to £14 million into Frannor;

(ii)                        Petra has a right of first refusal to participate in
any disposal or joint venture that Frannor may wish to undertake with regards to
its interest in Project Luangue, and a 'tag-along' right should the Xceldiam
Group wish to dispose of its interest in Frannor and Petra declines its right of
first refusal to participate. Xceldiam has a right of first refusal to purchase
any shares in Frannor held by Petra should Petra wish to dispose of such shares;
and

(iii)                       Petra has the right to appoint a director to the
board of Frannor.



Frannor's interests in the Project Luangue contracts are 39% (kimberlite) and
40% (alluvial) respectively. The Cooperation Warrants give Petra the rights to
acquire up to 26% of Frannor.



The Cooperation Warrants are exercisable by Petra at any time up until various
dates as shown below:


  Warrant tranche             Percentage of           Warrant exercise         Warrant expiry
                                                            price
                      Shares in Frannor (cumulative)

         1                         2.4                   £1,000,000     31 December 2006
         2                         4.8                   £1,000,000     30 June 2007
         3                         11.2                  £3,000,000     31 December 2007
         4                         18.4                  £4,000,000     30 June 2008
         5                         26.0                  £5,000,000     31 December 2008





Petra subscribed for 1,555,555 shares in Xceldiam (representing 2.9% of
Xceldiam's issued share capital) at the placing price of 45 pence per share when
Xceldiam was admitted to AIM in November 2005. Petra still holds this investment
which is separate to the Agreement and Cooperation Warrants.



Should future exploration developments at Project Luangue be in line with
Petra's   expectations, Petra would expect to exercise some, or all, of the
Cooperation Warrants. However, it is not bound to do so and should it choose not
to exercise one or more warrants by the specific expiry date, the remainder
remain in place. Petra has sufficient cash resources to exercise the first two
warrants; further warrants may be financed from expected operating cash flows,
however by that stage both Alto Cuilo and Luangue will have been advanced
considerably and, if they host economic kimberlites, other appropriate financing
opportunities will be considered. Petra can, at its sole election, introduce a
third party into the Petra subsidiary that will hold the Frannor shares on
exercise of the Cooperation Warrants but Petra will control a minimum of 50% of
the shares and retain control of the board of that Petra subsidiary.



Tim George, Chairman and CEO of Xceldiam, commented 'Given Petra's experience at
Project Alto Cuilo and the close proximity of the areas where exploration is
focused at each project, the strategic and technical cooperation will assist us
enormously in further defining and progressing our work programmes, leading to
the accelerated development of Project Luangue. I believe this agreement has the
potential to be of substantial benefit to all stakeholders and will ultimately
ensure a greater understanding of the significant potential of this highly
prospective diamond province'



Adonis Pouroulis, Chairman of Petra, said 'We look forward to working closely
with Xceldiam. Major exploration developments have taken place at Project Alto
Cuilo and we look forward to the possibilities of similar discoveries at Project
Luangue. Petra is confident that this area of Angola will prove, in time, to be
of major significance with regards to the production of diamonds, hence our
decision to also invest in Xceldiam when it was admitted to AIM. This agreement
with Xceldiam gives Petra the opportunity to consolidate its position in one of
the world's most prospective areas for diamond exploration.'



Ends



Notes

1. The information in this update with regards to Petra Diamonds that relates to
Exploration Results, Mineral Resources or Ore Reserves is based on information
compiled by Jim Davidson, Pr. Sci Nat (reg No 400031/06), who is a Member of the
Geological Society of South Africa, a 'Recognised Overseas Professional
Organisation' ('ROPO'), included in a list promulgated by the ASX from time to
time. Jim Davidson is a full-time employee of the Company and has sufficient
experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Jim
Davidson has given his written consent to the inclusion in this announcement of
the matters based on his information in the form and context in which it
appears.



2. It should be noted that the potential quantity in this report is conceptual
in nature, there has been insufficient exploration to define a Mineral Resource
and it is uncertain if further exploration will result in the determination of a
Mineral Resource.



For further information with regards to Xceldiam, please contact:


WH Ireland

David Youngman                          Tel: [phone]

Conduit PR

Angus Prentice                          Tel: [phone]

                                        Mob: [phone]

Leesa Peters                            Tel: [phone]



For further information with regards to Petra Diamonds, please contact:


Collins Stewart, London
Andrew Smith / Martin Eales             Telephone: [phone]

Parkgreen Communications, London
Justine Howarth / Cathy Malins          Telephone: [phone]



Notes to Editors:


About Xceldiam



O      Xceldiam's activities are focused on the exploration for economic
diamondiferous kimberlites and alluvial deposits in Project Luangue of north
east Angola, in association with Endiama and Bapsil, its partners in the
Project. The concession, which is approximately 3,000 km(2) in size, is located
within the diamond bearing kimberlite belt known as the Lucapa Graben. The
valuable Catoca mine is situated some 70 km north east of the Luangue
Concession.



O      Previous exploration in the concession area now covered by Project
Luangue by Condiama (the De Beers joint venture company in Angola) in the early
1970s identified eight kimberlites, at least four of which are diamondiferous.
These were under evaluation at the time Angola's civil war commenced which
curtailed further activities.



O      In May 2005 Xceldiam completed low level 22,000 line kilometre airborne
magnetic, radiometric and topographic surveys over Project Luangue, which
identified over 70 kimberlitic type anomalies, adding to the eight kimberlites
previously identified by Condiama.



O      Commissioning of the alluvial bulk sampling plant is currently underway
at the Ngombo tributary of the Luangue River. Alluvial sampling of the Luangue
corridor,  which has been the focus of exploration activities to date, along 5km
of river terraces between the Sampoio and Ngombo River tributaries will be
followed by sampling of a further extensive deposit on the Canguvo river some 25
km to the north west.



O      Formal approval of the kimberlite programme has been received from
Endiama. Drilling of 20 of the anomalies prioritised from the 70 identified in
the aerial survey, to ascertain whether they are kimberlitic in nature, will
commence shortly.



O      Xceldiam has a management team with practical diamond mining industry
experience, the depth of which will allow growth potential in a variety of
projects over the long term.  The team also has recently enhanced its team on
the ground to expedite the exploration programmes with management appointees
with extensive logistical, mining development and operating experience in
Angola.



O      Xceldiam aims to entrench and progress the opportunities available to it
within Project Luangue to create significant value for all shareholders whilst
contributing to the communities within which it operates.



For further information on Xceldiam, please visit www.xceldiamgroup.com



About Petra



O      Petra is focused on the exploration and mining of diamonds in Africa.
Petra's strategy is to continue to build its portfolio of revenue producing and
exploration assets, achieving the objective of becoming a 'mid-tier' diamond
group.



O      Petra has operations in Angola, South Africa, Botswana and Sierra Leone.
Petra is well placed to achieve high yielding results from the increasingly
robust market for diamonds.



O      Petra's exploration activities at Alto Cuilo in Angola continue to
deliver ever more exciting results and the joint venture with BHP Billiton has
expedited exploration with the identification to date of 38 kimberlitic
occurrences over an estimated surface area of approximately 1,437 hectares.



O      The South African operations are expected to deliver a significant
increase in production for the year to June 2006, giving the group healthy
production revenues. Two large stones have been reported in the last six months,
one 76 carat stone which sold for US$465,000 and also a 67 carat stone which was
sold for US$704,265.



O      In Botswana, exploration is currently focused on the Gope area where
Petra holds diamond prospecting licences covering ground that is known to host
several diamondiferous kimberlites. A 700km(2) low-level Xcalibur horizontal
gradient magnetic survey has been completed in the immediate vicinity of the
Gope kimberlites.



O      In Sierra Leone, Petra has earned a 51% interest in the Kono Project,
following the expenditure of $3million on the project. This JV with AIM and
TSX-listed Mano River Resources Inc is progressing well and first production
from the Lion fissures is on schedule for June 2006.



 For further information on Petra Diamonds, please visit www.petradiamonds.com


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