Update from Alto Cuilo

Petra Diamonds Ld
07 July 2005

7 July 2005



                             Petra Diamonds Limited

                              Alto Cuilo - update

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

Highlights

  • BHP Billiton elects to fund all exploration at Alto Cuilo
  • 59% of the 73 holes drilled to date intersect kimberlite - a very
    encouraging success rate
  • Review of geological and geophysical data with BHP Billiton identifies
    additional targets
  • Drilling identifies further kimberlite deposits
  • 115m tonne deposit now confirmed as diamondiferous
  • Higher kimberlite diamond valuation than previously expected

BHP Billiton Joint Venture

BHP Billiton has now elected to sole fund all kimberlite and alluvial
exploration and related costs on behalf of Petra Diamonds Alto Cuilo Limited ('
PDAC', the Petra/BHP Billiton JV vehicle) for the entire Alto Cuilo concession.

From 1 January 2005 (the date at which BHP Billiton elected to fund kimberlite
exploration within the ML Complex) to the end of June 2005, BHP Billiton has
advanced funding of approximately US$3.6m to PDAC in respect of exploration at
Alto Cuilo. BHP Billiton will start earning a direct interest in PDAC when it
has advanced funding of US$7.5m, which is expected to be the case later this
year.

Drilling

Drilling in excess of 8,895 metres on 73 holes has been undertaken to date, with
43 of these holes intersecting kimberlite. This equates to a success rate of
59%, a very encouraging success ratio for any kimberlite exploration project.
Drilling results indicate the presence of kimberlites with preserved crater
zones that have undergone very little erosion, thus underscoring the potential
for large size discoveries. Some holes have intersected kimberlite to vertical
depths of 280 metres, where drilling was stopped due to limitation of drilling
capacity but the kimberlite continued.

Re-classification of the geophysical and drilling data by Petra and BHP Billiton
has confirmed that 11 of the aeromagnetic anomalies tested are related to
kimberlite pipes, with other targets prioritised for drilling.

The current drilling programme will continue on the anomalies in the ML Complex
that have not yet been drilled with the expectation of significantly increasing
the number of kimberlite discoveries.

A second multi-purpose, larger diameter drill rig and 5-10 tonne per hour ('tph
') mobile sample plant will be sourced to test material from the kimberlite
groupings already defined and from future discoveries. The use of a second drill
and small mobile plant will substantially increase the rate of exploration
development.

Sample analysis

The results from the sample of over one thousand kilogrammes of kimberlitic
material sent for micro diamond analysis at Lakefield Research Centre in Canada
have now been received. These samples were taken from three of the eleven
kimberlite groupings, including the 115 million tonne deposit (announced by the
Company on 7 December 2004) and the kimberlite from which the 40 tonne bulk
sample was previously taken and which yielded a grade of 47 carats per hundred
tonnes ('cpht') as announced by the Company on 8 September 2004.

The results indicate that the macro and micro diamond populations do not fit '
typical' micro diamond grade estimate curves, in that recoveries are skewed
toward the macro population. All three kimberlites were certified as being
diamondiferous in nature and a full suite of kimberlite indicator minerals was
recovered for each kimberlite intersection for mineral chemistry assessments.
The presence of high chrome sub-calcic G10s and high sodium eclogitic garnets
indicates that lithologies typically associated with peridotitic and eclogitic
diamond sources have been sampled by these kimberlite pipes.

The 65 tph diamond recovery plant (MB100 and DMS) continues to be used mainly
for the treatment of alluvial samples. A total of 4,987 diamonds totaling 1,255
carats at an average stone size of 0.25 carats have been recovered to date. A
pitting and trenching programme on the river flats and hillsides has started in
order to further evaluate the potential for economically viable alluvial
deposits within the ML Complex.

BHP Billiton has completed a valuation of the diamonds recovered from the
kimberlite and alluvial sampling. Based on a preliminary result obtained from
310 carats, the diamonds recovered from the kimberlite samples averaged US$295
per carat. This is in excess of Petra's previous estimates of US$200 per carat.

Aeromagnetic programme

A Midas low level helicopter aeromagnetic survey will go ahead in July. It is
expected that, due to the sophistication of this system compared to the 1998
fixed wing survey executed by Petra and the use of twin sensors at closer line
spacing, additional magnetic anomalies are likely to be detected. The
aeromagnetic survey aims to assist in the discovery of further kimberlite
deposits as well as to accurately define the magnetic signatures of the
kimberlites discovered to date and of the untested anomalies identified in the
1998 high-level aeromagnetic programme.

Future focus

The next six months will focus on;

  • drilling of further anomalies within the ML Complex, with the expectation
    of significantly increasing the number of kimberlite discoveries; and
  • a pitting and trenching programme to further evaluate the potential for
    economic alluvial  deposits; and
  • the low level aeromagnetic survey, to assist in the discovery of further
    kimberlite

            deposits and to further define the magnetic signatures of the
kimberlites discovered to date and of the untested anomalies identified in 1998.

Adonis Pouroulis, Petra's Chairman, comments, 'We are delighted with these
results which further confirm our view of the potential of the Alto Cuilo
project. The excellent drilling success rate and sample results are extremely
encouraging and we are confident that further kimberlite discoveries will follow
from our exploration activities. The technical and financial relationship with
BHP Billiton is strong and we look forward to working with them and our Angolan
partners in developing this exciting, world-class project.'


 Ends


For further information, please contact:

Petra Diamonds, South Africa                  Parkgreen Communications, London
Adonis Pouroulis/David Abery                  Justine Howarth / Annabel Leather
Tel [phone]                           Tel [phone]

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



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