Option Agreement

Petra Diamonds Ld
30 September 2002


30 September 2002

Announcement (for release 07H00 30 September)

Petra Diamonds Limited ('Petra')


Blue Diamond Mines (Pty) Ltd (BDM), a 100% held subsidiary of Petra, has signed
a five year Option Agreement with Rio Tinto Mining and Exploration Limited (Rio
Tinto) in terms of which Rio Tinto will conduct a work programme over seven of
its mineral rights properties in South Africa's Northern Province.

  • Rio Tinto will pay to BDM an annual fee  related to the area under option
    subject to its decision through the option period to continue with its work
    programme.
  • If the option runs for the full five year period Rio Tinto will spend
    US$1,000,000 on exploration. All the costs of exploration are to be borne by
    Rio Tinto. The primary purpose of the exploration is to look for diamond
    bearing deposits.
  • Rio Tinto can allow the agreement to lapse without penalty at any point
    after the first year.
  • The agreement provides that upon Rio Tinto exercising its option the
    parties will participate in the venture 51%/49% in favour of Rio Tinto where
    Rio Tinto has not completed a feasibility study and 70%/30% where Rio Tinto
    has completed such a study.
  • In the event that a decision is made to proceed with the development of a
    mine the parties will undertake the financing pro-rata with provisions for
    dilution.
  • The diamonds would be marketed pro-rata to the parties' interests.
  • The agreement has taken into account the requirements of the new minerals
    legislation in South Africa scheduled to be promulgated shortly.


Contact Details


Adonis Pouroulis         00 27 11 460 1784      Petra Diamonds Limited
Benjamin Trisk           00 27 11 460 1784      Petra Diamonds Limited
Brian Moritz             ++44 207 728 2367      Grant Thornton
Howard Drummon           ++ 44 207 827 9988     Keith Bayley Rogers


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