Petra Diamonds - 50th Kimberlite Discovered at Alto Cuilo

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."



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~ 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: +44 (0) 20 7493 3713

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





Geraldine Richfield

Account Executive

Parkgreen Communications Limited

1st Floor Ireland House 150 New Bond Street London W1S 2AQ

t (+44) 20 7493 3713 f (+44) 20 7491 3936 m (+44) 7900 507 843



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