Alto Cuilo Update

Petra Diamonds Ld
20 June 2006


                            Petra Diamonds Limited

                        Exploration Update - Alto Cuilo


Petra Diamonds Limited ('Petra' or 'the Company'), the AIM-quoted and ASX-listed
diamond mining group, announces an important update with regards to the Alto
Cuilo project (the 'Project' or 'Alto Cuilo') in north-eastern Angola.


Highlights

  • Laboratory analysis of drill core has revealed a favourable mantle
    geotherm conducive for diamond formation in conjunction with some highly
    encouraging diamond stability field mineral grain counts and compositions,
    consistent with some of the world's economic kimberlite deposits
  • Kimberlites have been ranked in preparation for the large diameter
    drilling and bulk sampling campaign
  • Diamond drilling in the north-west of Alto Cuilo makes further progress,
    with the discovery to date of 39 kimberlitic occurrences (25 April 2006: 38)
    out of 46 targets drilled, an exceptional success rate of 85%
  • The third drill rig that arrived on site in April 2006 has been deployed
    to the north-east of the Project area, and will assist in the drilling of
    the 88 anomalies still to be investigated during this first core drilling
    phase of the Project
  • 507 alluvial pits (25 April 2006: 412) and 7 alluvial bulk sample trenches
    have been excavated, placing the Project in a position to commence with a
    trial alluvial mining test in the next few months
  • Budget of circa US$20 million for the year to June 2007, to be funded by
    BHP Billiton, has been approved - this would take the total invested by BHP
    Billiton at June 2007 to around US$45 million


Adonis Pouroulis, Petra's Chairman, comments: 'These highly encouraging diamond
indicator mineral chemistry and geotherm results from Alto Cuilo are consistent
with diamond-producing kimberlites globally and confirm Petra's belief that the
Alto Cuilo Project could host economic diamond deposits. The forthcoming large
diameter drilling and bulk sampling programme will move exploration to the next
level, targeting the kimberlites prioritised from the indicator mineral
analysis. It is also important to note that the first five target kimberlites
are all of considerable size. Furthermore, we expect to upgrade several more
kimberlites to bulk sampling status as additional indicator mineral results are
received. Exploration success at Alto Cuilo is following a focused approach
which reflects the support of our partner, BHP Billiton.'


Diamond indicator mineral chemistry

While the core drilling programme continues, Petra and BHP Billiton have been
working on the laboratory analysis of drill core recovered in advance of the
large diameter drilling campaign that is set to commence in Q3 Calendar 2006. To
date drill core samples have been submitted for laboratory analysis from 35
kimberlites - analysis from 11 kimberlites has been completed, samples from a
further 8 are in transit to the laboratory facility whilst electron microprobing
of indicator grains derived from 16 kimberlites is underway. The laboratory
analysis of kimberlite core is an ongoing process and results will be announced
as and when available.

The analysis of the first 11 kimberlites has delivered some highly encouraging
diamond indicator mineral results, leading to the prioritisation of 5 of the
kimberlites for large diameter drilling. Key data as revealed is summarised
below:

(i)   Chrome diopside analysis returned a favourable mantle geotherm, indicating
      that there is a high probability that the kimberlite will have sampled 
      material derived from the earth's diamond stability field at a temperature 
      favourable for the formation of diamonds;

(ii)  Peridotitic garnet analysis revealed pressure-temperature conditions 
      compatible with the presence of diamond stability field G10 garnets
      derived from well within the diamond stability field; and

(iii) Eclogitic garnet analysis also gave excellent results, with
      an abundance of high sodium eclogitic garnets in some samples, further
      increasing the potential for quality diamondiferous kimberlite.

Diamond indicator mineral chemistry is crucial in terms of assessing a
kimberlite's likelihood of hosting diamonds. It is accepted by the world's
kimberlite experts that the higher the count of the acknowledged diamond
stability field indicators (garnets and spinels), the higher the likelihood of
the kimberlite hosting economic grades. The results at Alto Cuilo are very
exciting and are comparable to other economic kimberlite deposits around the
world.

Although there is very little official data available on the nearby Catoca mine,
where 2005 production was around 4 million carats, diamond indicator mineral
chemistry analyses published by Sobolev et al (1990) points towards some of the
Alto Cuilo kimberlites having G10 garnet populations similar to those of Catoca,
again further increasing the likelihood for some of the Alto Cuilo kimberlites
to host significant diamond deposits.

Bulk sampling

Following the diamond indicator mineral analyses, a technical target
prioritisation meeting was recently held between representatives of Project Alto
Cuilo, Petra and BHP Billiton, where it was decided which kimberlites should be
prioritised for inclusion in the forthcoming large diameter drilling programme.
The ranking is as follows:

Kimberlite           Ranking              Surface area (hectares) estimated 
                                          from aeromagnetic signatures
AC 60                1                    30
AC 98                2                    175
AC 42                3                    106
AC 72                4                    30
AC 16                5                    120

Delivery of the large diameter drill rig and 10 tonne per hour sample plant to
site has unfortunately been delayed by up to 10 weeks, with the large diameter
drilling campaign now expected to commence in September 2006. This delay was
outside of Petra's and BHP Billiton's control and is symptomatic of the problems
being experienced by the mining industry in general with the heavy demand on
equipment manufacturers. However, Petra still expects the first bulk sampling
results to be available in Q4 Calendar 2006, just later in that quarter.

The time delay does have one major benefit, in that the diamond indicator
mineral analysis of the remaining kimberlites (as well as anomalies still to be
drilled) may well result in other kimberlites being prioritised for bulk
sampling, therefore making the large diameter drilling campaign as efficient and
effective as possible.

Core drilling exploration

Since the last update on 30 April 2006, the core drilling exploration programme
has moved ahead rapidly, with the discovery of a further kimberlite and the
deployment of one of the three core drills to the north-east of the Project
area.

In summary:

  • The total number of kimberlite occurrences now stands at 39 from 46
    targets drilled, an exceptional success rate of 85% by reference to other
    global diamond exploration projects
  • Approximately 23,000 metres (25 April 2006: 19,000) of core drilling has
    now been completed, illustrating the effectiveness of the three drills now
    working on site. A total of 158 holes have been drilled to date
  • A further 88 aeromagnetic anomalies greater than 8 hectares in estimated
    surface area remain to be drilled within the area surveyed by the Helimag in
    July 2005. Due to the very large number of both kimberlite occurrences
    identified to date and anomalies identified in the Helimag survey, it has
    been decided to only focus on anomalies greater than 8 hectares in size.
    There are numerous magnetic anomalies smaller than 8 hectares, but this size
    has been selected as the bottom cut at this stage. Furthermore, this frees
    up core drill capacity, assisting in the drilling of additional holes into
    some of the larger kimberlites so as to get more material for ongoing
    diamond indicator mineral analysis
  • Drilling of anomalies in the north-east of the Project area is about to
    commence. Access roads have already been cut by the heavy earth moving
    equipment and the satellite camp to service this operation is almost
    complete. The anomalies in the north-east are smaller in estimated size (40
    hectares or less) than those in the north-west, but are well defined on the
    Helimag survey, suggesting a good possibility of the discovery of fresher
    Reworked Volcaniclastic Kimberlite ('RVK') and Tuffisitic Kimberlite Breccia
    ('TKB') facies, possibly closer to surface.

Alluvial Exploration Programme

The alluvial pitting and trenching programme is also progressing well, with 507
exploration pits and 7 bulk sample trenches having been excavated. Some 5,800
cubic metres of gravel have now been excavated, resulting in the identification
of a test block ('Luange 1') hosting approximately 115,000 cubic metres of
gravel (Petra internal estimate) with an indicated stripping ratio of
approximately 6:1 and an indicated grade is 0.36 carats per cubic metre for the
in situ material.

BHP Billiton Joint Venture

As at 31 May 2006, BHP Billiton had advanced cumulative funding of US$21.1
million (31 March 2006: US$16.1 million) to Petra Diamonds Alto Cuilo Limited in
respect of exploration at Alto Cuilo. The exploration budget at Alto Cuilo for
the year to June 2007 (to be funded by BHP Billiton) is circa US$20 million,
further illustrating the importance of Alto Cuilo to all parties involved.

Ends

Notes

1. The information in this update 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, please contact:

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

Notes to Editors:

Overview of Petra's Operations



• 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.

• 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.

• 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 39 kimberlitic
  occurrences together with diamond indicator mineral results comparable with 
  some of the world's economic diamond deposits.

• In May 2006 Petra announced that it has entered into a strategic
  cooperation agreement with AIM quoted Xceldiam Limited, with regards to the
  neighbouring Luangue and Alto Cuilo diamond projects

• 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 year, one
  76 carat stone which sold for US$465,000 and also a 67 carat stone which was
  sold for US$704,265.

• 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.

• 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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