Re Joint Venture

Petra Diamonds Ld
01 August 2007


                              Petra Diamonds Limited

              Petra Diamonds Signs Luangue Joint Venture Agreement

Petra Diamonds Limited ('Petra') announces that it has entered into a joint
venture agreement ('Luangue JVA') with BHP Billiton to develop the Luangue
diamond project ('Project Luangue') in north eastern Angola.

Highlights

  • On 28 February 2007 Petra acquired the entire issued share capital of
    Frannor Investments and Finance Limited ('Frannor') from Xceldiam Limited 
    ('Xceldiam')

  • Frannor holds interests in Project Luangue, the diamond project that
    borders the northern boundary of Project Alto Cuilo (which is subject to a
    separate joint venture agreement between Petra and BHP Billiton) in the
    diamond belt of north eastern Angola

  • Under the terms of the Luangue JVA:

      (i)     BHP Billiton has acquired 25% of the issued share capital of
              Frannor from Petra for a cash consideration of US$22.35 million; 
              and

     (ii)     BHP Billiton's shareholding in Frannor will remain at 25% until
              BHP Billiton's earn-in date ('BHP Billiton Earn-in Date'), defined 
              as the earlier of (i) the formation of a kimberlite mining company 
              or (ii) 180 days following the submission of a Technical and 
              Economic Viability Study ('EVTE') in accordance with the Luangue 
              kimberlite concession contract, provided that in either case a BHP 
              Billiton pre-feasibility study is completed beforehand. Submission 
              of an EVTE to the relevant authorities in Angola provides a basis 
              for the formation of a mining company. At the BHP Billiton Earn-in 
              Date, BHP Billiton's shareholding in Frannor will increase to 75%, 
              with Petra holding the remaining 25% of Frannor; and

     (iii)    BHP Billiton will sole fund the development of Project Luangue up
              to the BHP Billiton Earn-in Date. Should a minimum expenditure 
              commitment, defined as three times Petra's net investment cost, 
              not have been reached at the BHP Billiton Earn-in Date, BHP 
              Billiton will continue to sole fund until it is achieved. When 
              this BHP Billiton sole funding threshold has been reached, BHP
              Billiton and Petra will fund the development of the Project 
              Luangue pro rata to their 75% / 25% respective shareholdings in 
              Frannor (with commensurate dilution if either defaults in 
              funding). BHP Billiton will provide debt financing for Petra's 
              share of the funding requirements, if so requested by Petra; and

      (iv)    Petra has been funding the development of Project Luangue since 1
              March 2007. This expenditure, of circa US$3.5 million, will 
              effectively be refunded to Petra by BHP Billiton by way of BHP 
              Billiton making contributions to Frannor in respect thereof, as 
              part of BHP Billiton's sole funding commitment, enabling Frannor 
              to make repayment of such expenditure to Petra in accordance with 
              the terms of the Luangue JVA; and

       (v)    BHP Billiton and Petra will work together to further Frannor's
              objective of fast-tracking the technical development at Project 
              Luangue.

Adonis Pouroulis, Chairman of Petra, said 'The Luangue joint venture agreement
with BHP Billiton exemplifies the relationship that both Petra and BHP Billiton
have with ENDIAMA and Luangue's local Angolan partners. The Luangue joint
venture will provide increased investment and accelerated development for
Project Luangue towards proving a sustainable diamond resource, achieving our
goal with BHP Billiton and our Angolan partners of developing world class
exploration projects in Angola.'

Background

On 28 February 2007 Petra acquired the entire issued share capital of Frannor
from Xceldiam for an all share consideration of US$65.14 million (£31.79
million).

Frannor's only business is its interest (via its wholly owned subsidiary) in
Project Luangue, a highly prospective diamond exploration project in
north-eastern Angola, bordering Petra's more advanced Project Alto Cuilo to the
south. Petra considers there to be 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.

Frannor (via its wholly owned subsidiary) holds a 39% interest in the Project
Luangue exploration licence for kimberlite diamond deposits and a 40% interest
in the Project Luangue exploration licence for alluvial diamond deposits.

Petra's other main focus in Angola is Project Alto Cuilo, where Petra and BHP
Billiton are working together within a separate joint venture agreement. The
details of that joint venture agreement were announced on 14 September 2004.

Rationale for the Transaction

Petra originally acquired Frannor due to its interest in Project Luangue and
Petra's objective of increasing its geographical spread of assets across the
African continent, focusing on areas that are known to hold major diamond
deposits, such as the diamond belt of north east Angola.

The Luangue JVA brings significant advantages to Petra:

•         Petra does not fund development of Project Luangue before the BHP
Billiton Earn-in Date when a significant milestone has been achieved, being the
preparation of a BHP Billiton pre-feasibility study together with either the
formation of a kimberlite mining company or the submission of an EVTE;

•         BHP Billiton will sole fund the development of Project Luangue until
the later of the BHP Billiton Earn-in Date and BHP Billiton achieving the
minimum expenditure commitment described in (iii) above;

•         it further consolidates Petra's project base in Angola, offering
geographical synergies and giving Petra access to the technical skills,
experience and project management capability of BHP Billiton;

•         it will enable BHP Billiton and Petra to combine their extensive
experience in this area of Angola together with their skills in diamond
exploration and experience in working together to develop the full potential of
Project Luangue; and

•         it will broaden and strengthen further the solid working relationship
that Petra and BHP Billiton have built at Alto Cuilo, benefiting exploration at
Luangue and opening up the possibility for similar joint venture arrangements
elsewhere in Angola.

Exploration work carried out to date at Project Luangue supports the 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 magnetic anomalies have been identified to date.  As detailed
information on diamond content emerges on the Project Alto Cuilo kimberlitic
occurrences from the bulk sampling campaign underway there, the selection and
prioritisation of bulk sample targets at Project Luangue will be enhanced. This
is expected to fast-track exploration developments at Project Luangue and is
also expected to reduce costs in many areas, accelerating progress towards a
pre-feasibility study.

The Luangue JVA is distinct from the joint venture agreement in place between
Petra and BHP Billiton at Alto Cuilo ('Alto Cuilo JV'). The Alto Cuilo JV has
different terms, and requires BHP Billiton to spend US$60 million to acquire a
75% holding in Project Alto Cuilo, at which stage the parties will fund on a 75%
/ 25% basis.


Ends

Note: For the purposes of Schedule 4 of the AIM Rules, the cash consideration of
US$22.35 million as well as the development expenditure to be refunded to Petra
of circa US$3.5 million will be added to Petra's treasury. Petra has no specific
plans for the use of these funds at this time.

For further information, please contact:
Louise Goodeve / Justine Howarth                 Telephone: [phone]
Parkgreen Communications, London

Adrian Hadden / Chris Rollason                   Telephone: [phone]
Collins Stewart, London


Notes to Editors:

About Project Luangue

Petra's activities at Project Luangue are focused on the exploration for
economic diamondiferous kimberlite and alluvial deposits. The Luangue concession
area, which is approximately 3,000 km(2) in size, is in the diamond bearing
kimberlite belt known as the Lucapa Graben. The valuable Catoca mine (production
of circa 7 million carats expected 2007) is situated some 70 km north east of
the Luangue concession area.

Previous exploration in the concession area by Condiama (the previous De Beers
representative company in Angola) in the early 1970's identified eight
kimberlites in the Luangue concession area, at least four of which are
diamondiferous.

Petra's subsidiary Frannor has two Angolan partners at Project Luangue; Empresa
Nacional De Diamantes De Angola, Endiama, EP ('ENDIAMA'), which represents the
Angolan government, and Bapsil Service Limitada ('Bapsil'), an Angolan
commercial company.  Frannor (via its wholly owned subsidiary) has a 39%
interest in the Project Luangue kimberlite exploration agreement and a 40%
interest in the Project Luangue alluvial exploration agreement.

Kimberlite programme

As at Project Alto Cuilo, aerial surveys to date have indicated the presence of
a significant number of anomalies, with over 70 magnetic anomalies identified in
initial ground and aerial surveys undertaken. A core drilling programme has
resulted in the identification of HS-1, beneath 23 metres of overburden, with
diatreme facies kimberlite outcroping at surface in parts of the pipe.

Diatreme facies kimberlite was also intersected at a shallow depth (20 metres)
in target area HS-16, situated in the Nacavuri valley north of the base camp.
The dimensions and character of this pipe are currently being determined by
further drilling.

Alluvials

To date, two areas, the Canguvo area in the central north, and the
Sampoio-Ngombo corridor along the Luangue River in the central area, have been
the focus of exploration for diamond bearing alluvial gravels. Over 200,000
cubic metres of alluvial gravels has been delineated, with initial sampling
results indicating encouraging recoveries of gem quality diamonds, including an
18.21 carat gem quality diamond from the Canguvo area.

Diamond recoveries from these gravels are yet to be confirmed as being
statistically representative to define an economic resource, however it is
particularly encouraging at this early stage to see the quality of the diamonds
in the Canguvo area and the concentrations of diamonds in the Ngombo area. Bulk
sampling of the deposits will continue to be processed through the alluvial bulk
sampling plant in place at the Ngombo tributary of the Luangue River.



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