Alto Cuilo Update

Petra Diamonds Ld
31 July 2006

31 July 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.


Core drilling exploration


Since the last update on 20 June 2006, the core drilling exploration programme
has noted a further major success, with the discovery of the 50th kimberlite at
Alto Cuilo.


  • The total number of kimberlite occurrences now stands at 50 (20 June; 39)
    out of 60 targets drilled, a success rate of 83%, which is considered
    exceptional when compared with other global diamond exploration projects.
  • Approximately 26,000 metres of core drilling has now been completed,
    illustrating the effectiveness of the three drills now working on site.  A
    total of 190 holes have been drilled to date.
  • Drilling of anomalies in the north-east of the Project area has commenced,
    with 4 of the 50 kimberlites identified being situated in the north-east
    area.




Bulk Sampling


The Company announced on 20 June 2006 that due to supply problems in the mining
equipment supply industry, delivery of the large diameter drill rig had
unfortunately been delayed by up to 10 weeks, with the large diameter drilling
campaign expected to commence in September 2006. Petra is now pleased to advise
that the drill rig has arrived in Luanda, cleared customs and will be
transported to site shortly. This is some 4 weeks earlier than expected and
therefore will allow the bulk sampling to commence earlier than previously
anticipated.


The large diameter drill rig will take bulk samples from the kimberlites
prioritised for bulk sampling and a 10 tonne per hour mobile dense media
separation ('DMS') plant will then treat the bulk samples. The DMS will arrive
at port in Angola shortly and after clearing customs is expected to arrive on
site at Alto Cuilo within 4 weeks. Due to the time required for the drill rig to
extract the first bulk samples, the arrival of the DMS on site after the drill
will not delay the commencement of the bulk sampling campaign.



Xceldiam - Strategic Cooperation


Xceldiam Limited announced on 25 July 2006 that core drilling at Project Luangue
had returned excellent first results, with drilling on the first target
intersecting kimberlite. When the Strategic Cooperation Agreement was announced
on 30 May 2006, both Petra and Xceldiam stated that they believed that Project
Luangue may host kimberlite geology similar to that of Project Alto Cuilo. This
news supports our belief and Petra looks forward to further developments at
Project Luangue.



Adonis Pouroulis, Petra's Chairman, comments: 'The discovery of the 50th
kimberlite at Alto Cuilo is yet another milestone in the development at Alto
Cuilo and demonstrates just how far Alto Cuilo has come. The exploration results
at Alto Cuilo have surpassed our expectations, particularly given the number of
kimberlites now discovered and the exciting indicator mineral chemistry recently
announced.



'With regard to the news from Xceldiam, we note with interest the very early
success at Luangue. The cooperation between Petra and Xceldiam is already
leading to significant benefits with regards to exploration at Luangue and the
management of both companies look forward to continuing to work together for the
benefit of both Projects Luangue and Alto Cuilo.'




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 50 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 exploration
production from the Lion fissures commenced in June 2006.





 For further information on Petra Diamonds, please visit www.petradiamonds.com




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