Update - Koffiefontein Mine

Petra Diamonds Ld
18 December 2006

For release 18 December 2006



                             Petra Diamonds Limited

                          Update - Koffiefontein mine

Petra Diamonds Limited ('Petra' or 'the Company'), the AIM-quoted and ASX-listed
diamond group, announces that it and its wholly owned subsidiary, Blue Diamond
Mines (Pty) Limited ('BDM'), have entered into a conditional agreement ('the
Agreement') with De Beers Consolidated Mines Limited ('De Beers') to acquire the
mining and associated capital assets ('Assets') previously used by De Beers in
the operation of the Koffiefontein diamond mine ('Koffiefontein') situated in
the Free State province of South Africa.


BDM has also applied to the South African Department of Minerals and Energy ('
DME') for a mining right in respect of Koffiefontein; De Beers ceased mining at
Koffiefontein when its old order mining right expired in February 2006. In
accordance with South African mining legislation, BDM is not permitted to
commence mining until the new mining right is issued; Petra expects this to be
issued shortly and BDM will then use the assets acquired from De Beers to
operate Koffiefontein.


The consideration for the Assets is R81.9 million (£5.98 million); this
consideration is to be settled by BDM assuming De Beers' rehabilitation
obligations at Koffiefontein, which amount to R80 million (£5.84 million), plus
the payment in cash by BDM to De Beers of R1.9 million (£138,700). There is no
further consideration with regards to the Assets.


Completion of the Agreement is conditional upon the following key conditions:

(i)       the DME issuing to BDM a new mining right in respect of
          Koffiefontein; and

(ii)      the DME issuing a closure certificate to De Beers in
          respect of Koffiefontein; and

(iii)     the DME consenting to the cession, transfer and delegation
          of the rehabilitation obligations and liabilities in respect of 
          Koffiefontein from De Beers to BDM; and

(iv)      the return to De Beers by the DME of all amounts and
          financial guarantees previously deposited by De Beers with the DME as 
          part of De Beers rehabilitation obligations in respect of 
          Koffiefontein; and

(v)       approval by the South African Competition Commission.



When the conditions above have all been met, which is expected to be in early
2007, Petra will commence production from Koffiefontein. BDM has been, with
permission from the DME, conducting care and maintenance activities for the last
few months in order to maintain the condition of the cave to ensure the
efficient commencement of mining activities on receipt of the mining right.



Given the nature of the proposed transaction, the Company has provided such
disclosure, as it is able, in accordance with Schedule 4 of the AIM Rules as a
Substantial Transaction.  A further announcement will follow in due course which
will include a resource statement for the Koffiefontein mine, currently under
licence review, as described above.



An exchange rate of R1:£0.073 has been used for the purposes of this
announcement.



 Ends



For further information, please contact:


Cathy Malins / Annabel Leather                   Telephone: [phone]
Parkgreen Communications, London




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