Acquisition Of Kalahari

Petra Diamonds Ld
07 September 2005

For release 7 September 2005

                             Petra Diamonds Limited

                   Proposed Acquisition of Kalahari Diamonds

Petra Diamonds Limited ('Petra' or 'the Company'), the AIM-quoted and ASX-listed
diamond mining group, announces that it has entered into a conditional agreement
to acquire in a share-for-share transaction the entire issued share capital of
Kalahari Diamonds Limited ('Kalahari') ('the Transaction').

Kalahari, through its wholly-owned Botswana subsidiary, Sekaka Diamonds (Pty)
Limited, is the holder of approximately 77,000 km2 of highly prospective diamond
prospecting licences in Botswana. Botswana is the world's largest diamond
producer by value and hosts two of the world's biggest diamond mines, Orapa and
Jwaneng. Kalahari also has a relationship with BHP Billiton whereby Kalahari has
rights to direct the deployment of BHP Billiton's proprietary Falcon technology
and access to an experienced Falcon data acquisition and geophysics team.

The Transaction represents a significant step in Petra's strategy of building a
quality exploration portfolio to complement its current producing mines, as
Petra continues with its objective of becoming a significant player in the
diamond industry. One of Petra's objectives has been to increase its
geographical spread of assets across the African continent, focusing on areas
that are known to hold major diamond deposits so as not to be overly reliant on
any one country.

The acquisition of Kalahari will:

•         meet one of Petra's objectives to geographically diversify its African
asset base

•         give Petra the largest land area under prospecting licence in
Botswana, all of that land being on craton and highly prospective

•         give Petra an important base in Botswana, the world's largest diamond
producer, offering a modern, highly developed mining, commercial and financial
environment

•         through Kalahari's agreements with BHP Billiton, give Petra access to
the unique benefits of the proprietary Falcon technology as well as an
experienced Falcon data acquisition and geophysics team

•         give Petra access to five known kimberlites in the Gope area, as well
as other potential kimberlites in other licence areas. Petra's track record in
the development of small and medium sized orebodies will provide a new dimension
in the evaluation of these kimberlite occurrences

•         give Petra access to more than 200,000 line km of Falcon data which
has already been flown and is currently being analysed

•         in due course following completion, introduce as Petra shareholders
some of the world's largest and most influential diamantaires, as well as the
International Finance Corporation (a subsidiary of the World Bank) and new
institutional investors

•         in due course following completion, increase BHP Billiton's
shareholding in Petra

•         include approximately US$3m of cash expected to be held by Kalahari at
30 September 2005, being the anticipated completion date

Details of the Transaction

Petra has entered into a conditional agreement to acquire in a share-for-share
transaction the entire issued share capital of Kalahari from Kalahari Diamonds
Resources Plc ('KDR'). The Transaction is conditional on the approval of KDR
shareholders at an EGM scheduled to be held on 26 September 2005.

Petra will issue 16,166,529 shares ('the Consideration Shares') (representing
12.3% of Petra's current issued share capital) to KDR in consideration for the
sale of Kalahari's entire issued share capital to Petra.

Based on a price of 85 pence per Petra share (being the price at which shares
were issued in Petra's £17.1 million institutional fundraising completed in June
2005), the consideration would value Kalahari at approximately US$25 million and
based on a price of 73.5 pence per Petra share (being Petra's closing price on
AIM on 5 September 2005), the consideration would value Kalahari at
approximately US$21.9 million.

Kalahari is currently a 100% owned subsidiary of KDR.  The structure of the
Transaction is that Petra will acquire the entire share capital of Kalahari from
KDR, issuing the Consideration Shares to KDR.  Following completion of the
Transaction, it is intended to convene a second EGM of KDR at which resolutions
will be proposed to initiate a members' voluntary winding-up of KDR to
distribute KDR's assets to its shareholders, which at that point will comprise
the Consideration Shares.  As a consequence KDR shareholders will ultimately
become direct shareholders in Petra.

No regulatory approvals are required to complete the Transaction that have not
already been obtained.

A Notice of an EGM, including an explanatory letter from the KDR Board, will be
dispatched by KDR to its shareholders shortly. The directors of KDR have
confirmed to Petra that they intend to unanimously recommend to KDR shareholders
that they vote in favour of the Transaction.

Adonis Pouroulis, Chairman of Petra, comments, 'The acquisition of Kalahari is
part of Petra's stated objective of growing its business in Africa as well as
diversifying its spread of assets. Kalahari offers the perfect opportunity for
Petra to enter Botswana, a heavyweight in the diamond industry. We believe that
Kalahari holds some very exciting exploration ground and we are confident that
this will yield highly positive exploration results in the future.'

A Petra presentation covering Petra's proposed acquisition of Kalahari and
recent developments in Petra's other operations will be posted onto the
Company's website, www.petradiamonds.com, from noon London time 7 September
2005.

Information on Kalahari

Kalahari is a diamond exploration company which explores for diamonds in
Botswana through a strategic alliance with BHP Billiton.  Kalahari's founding
shareholders include BHP Billiton (20%), International Finance Corporation
(9.36%), some of the world's leading diamantaires (approximately 40%) and
institutional investors.

Kalahari applies the airborne Falcon survey method in conducting diamond
exploration on its prospecting areas in Botswana.  Desert sand covers about 75%
of Botswana and this, together with underlying Karoo lava, has meant that
diamond exploration programmes have previously faced difficulties in the
detection of buried kimberlites. Access to the Falcon system will assist in
overcoming these difficulties.

Kalahari currently holds approximately 77,000km2 of prospective diamond terrain
in Botswana.  Botswana is the world's largest producer of diamonds by value,
with large producing mines at Jwaneng, Orapa, Letlhakane and Damatshaa.  The
Orapa and Jwaneng pipes are of an exceptional size and these mines host reserves
and resources that support a life of mine in excess of 20 years at present
mining rates.

The Falcon technology provides a new dimension in exploration for diamonds.  It
is able to 'see through' the surface cover which overlies much of Botswana and
detect anomalies through these cover rocks. Falcon is an airborne system that
can cover larger remote areas rapidly and cost effectively.  Falcon is of great
value in areas covered by desert sand, such as in Botswana, and Petra considers
the deployment of Falcon, in conjunction with other geophysical and exploration
techniques, to be a more effective approach.

BHP Billiton has back-in rights with respect to the license areas whereby BHP
Billiton is entitled to a 51% or 60% joint venture interest (depending on how
the relevant prospecting licence was acquired).  Upon the exercise of back-in
rights, BHP Billiton would pay to Kalahari 400% of the past expenditure on the
specific project area and fund Kalahari's share of expenditure of a
pre-feasibility study on the relevant property.

For the year to 30 June 2005, Kalahari's loss before tax was US$1.379 million
and as at 30 June 2005 had net assets of US$18.152 million.

Conditions Precedent

Completion of the Transaction is conditional, inter alia, upon the following key
conditions:

•         approval from KDR's shareholders at an extraordinary general meeting
of KDR

•         no material breach of warranty occurring prior to completion

•         admission of the Consideration Shares to trading on AIM and quotation
of the Consideration Shares on the Australian Stock Exchange.

It is expected that the conditions will be satisfied on or before 30 September
2005.

Anticipated Timetable

Kalahari EGM to approve the Transaction              26 September

Completion and Transaction becomes unconditional     30 September


 Ends


For further information, please visit contact or visit www.petradiamonds.com

Petra Diamonds, South Africa                    Parkgreen Communications, London
Adonis Pouroulis/Johan Dippenaar                Justine Howarth / Cathy Malins
Tel [phone]                             Tel [phone]

John Baillie, Perth                             Field PR, Adelaide
Tel [phone]                             Kevin Skinner
                                                Tel [phone]
                                                Mobile [phone]




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