Interim Results

Sunrise Diamonds PLC 21 May 2007 Interim Statement For the six month period to 31 March 2007 Chairman's Statement I am pleased to report the Company's progress and interim results for the six month period ended 31 March 2007. Review of Activities The Company is continuing its vigorous exploration activity in Finland's Karelian Craton, where its objective is the discovery of world class diamond deposits comparable to those now being mined in the same geological setting on the other side of the Russian border at Arkhangelsk. Our interests in Finland span the three main areas where kimberlites, the host rock for diamonds, are found. We are currently focused on two of these areas, Kaavi-Kuopio and Kuusamo. In the Kaavi-Kuopio area of south central Finland we have completed a technical review of the numerous kimberlites held by Nordic Diamonds Inc. where we are earning up to a 75% joint venture interest. Kimberlites 10, 14, 17 and 22 have been selected for drilling for further micro-diamond extraction and diamond grade evaluation. Previous exploration suggests Kimberlite Pipe 10 is currently the largest of these bodies with a surface area of approximately 2 hectares. Kimberlite 17 also has a surface area of approximately 2 hectares and indicator mineral chemistry suggesting good diamond prospectivity but records indicate only minimal sampling suggesting that the diamond content has not been systematically evaluated. The other targeted kimberlites appear smaller although they have not all been closed off by previous drill holes. Other pipes of future interest covered by the Nordic JV claims include Kimberlites 12 (1.6 hectares) and 21 (1.3 hectares). A 16.6 tonne mini-bulk sample of the latter, taken in 1995, returned a reported grade of 26.7 carats per hundred tonnes including a stone of 1.13 carats. Individually, Pipes 12 and 21 are currently considered too small for development but could provide feed for a central processing plant in the Kaavi-Kuopio area if this can be justified by future developments. Work is advanced at Targets 295 and 298 near Kuopio where we are narrowing the search for the source of diamonds and diamondiferous kimberlite found in the surface sediments and where we are hoping to make new kimberlite discoveries. At Kuusamo, in northern Finland, our past exploration has discovered a new kimberlite cluster with three of the seven kimberlites found so far being diamondiferous. Work continues here and a new target, Target 32 will be tested shortly. Elsewhere in Finland we are continuing our generative work with the aid of the BHP Billiton diamond exploration database. A number of intriguing targets are emerging that will no doubt become more prominent in future as work progresses. During the period £545,000 was raised before expenses through a placing of 27,250,000 new ordinary shares and I would like to take this opportunity to thank shareholders for their continuing support for work on the Company's exciting diamond exploration projects. Results The loss for the six month period was £97,598. (Six months to 31 March 2006 £97,759 restated on adoption of FRS 20 'Share Based Payments'). This loss comprises administration costs of £97,578 exploration costs (written-off) amounting to £7,371 and interest income of £7,351. The Company recently commissioned Hardman & Co. to produce a research note on the Company. This is available on our website and I encourage you to read it at http://www.sunrisediamonds.com/research.html. As the research report points out, the Company has a high kimberlite discovery rate compared to its competitors as well as new projects that could 'sparkle' and we look forward to bringing these to account in the future. Patrick Cheetham 21 May 2007 Executive Chairman For further information contact : Sunrise Diamonds plc Tel: + 44 (0)1625 505947 Sunrise House Fax: + 44 (0)1625 626204 Hulley Road Macclesfield Website: www.sunrisediamonds.com Cheshire SK10 2LP John Greenhalgh/Ron Marshman, City of London PR Ltd. Tel: +44 ( 0)20 7628-5518 Brett Miller, Ruegg & Co Limited Tel: +44 (0)20 7584 3663 Profit and Loss Account for the six months to 31 March 2007 Six months Six months to Twelve to 31 March 2006 months to 30 31 March Unaudited September 2007 2006 Unaudited As restated As restated £ £ £ Exploration costs written off 7,371 9,535 22,213 Administrative expenses 97,578 94,586 173,195 Operating loss (104,949) (104,121) (195,408) Interest receivable 7,351 6,362 14,254 Loss on ordinary activities (97,598) (97,759) (181,154) before taxation Tax on loss on ordinary - - - activities Loss for the period (97,598) (97,759) (181,154) Loss per share - basic (pence) (0.09) (0.12) (0.21) (note 2) Balance Sheet as at 31 March 2007 As at 31 March As at 31 As at 2007 March 2006 30 September Unaudited Unaudited 2006 As restated As restated £ £ £ Fixed assets Intangible Assets 788,989 482,454 632,806 Current assets Debtors 23,131 62,207 47,691 Cash at bank and in hand 664,195 492,541 384,190 687,326 554,748 431,881 Creditors: amounts falling due (79,529) (125,724) (100,315) within one year Net current assets 607,797 429,024 331,566 Net Assets 1,396,786 911,478 964,372 Capital and reserves Called up share capital 124,905 93,153 97,655 Share premium account 1,707,939 1,087,014 1,217,562 Share option reserve 81,785 68,162 69,401 Profit and loss account (517,843) (336,851) (420,246) Shareholders' funds 1,396,786 911,478 964,372 Cash Flow Statement for the six months to 31 March 2007 Six months to Six months Twelve 31 March to months to 31 March 30 September 2007 2006 2006 Unaudited Unaudited As restated As restated £ £ £ Net cash outflow from operating (88,791) (77,201) (178,142) activities Returns on investments and servicing of finance Interest received 7,351 6,362 14,254 Net cash outflow from operating activities after returns on investments and servicing of (81,440) (70,839) (163,888) finance Capital expenditure and financial investment Purchase of intangible fixed (156,183) (224,445) (374,797) assets Net cash outflow from capital expenditure and financial investment (156,183) (224,445) (374,797) Financing Issue of share capital (net of 517,628 398,000 533,050 expenses) Net cash inflow from financing 517,628 398,000 533,050 Increase/(Decrease) in cash 280,005 102,716 (5,635) Notes to the Interim Statement 1. Basis of preparation The interim statement has been prepared on the basis of the accounting policies set out in the Company's financial statements for the period ended 30 September 2006 as amended by the adoption of FRS 20 and the application of FRS 25. The financial information set out in this statement relating to the period ended 30 September 2006 does not constitute statutory accounts for that period. Full audited accounts in respect of that financial period have been delivered to the Registrar of Companies. They did not contain a statement under Section 237(2) or (3) of the Companies Act 1985 and received an unqualified audit opinion, however there was an emphasis of matter in relation to the availability of project finance. In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group's projects move to the development stage, specific financing will be required. During the period the Company raised £517,628 by way of a private placing. In light of the foregoing the Directors are satisfied that the Company has adequate resources to continue to operate for the foreseeable future. For this reason they continue to adopt the 'going concern' basis for preparing the accounts. The interim report has been approved by the Directors and is unaudited. FRS 20 - Share based Payments The Company has applied the requirements of FRS 20 (share based payments) in accordance with the transitional provisions to all relevant equity instruments granted after 7 November 2002 and unvested at 1 October 2005. The Company issues share based payments to directors and to employees of the company providing its management services (Tertiary Minerals plc). All share based payments are measured at fair value at the date of grant and expensed on a straight line basis over any vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of a model based on the Black-Scholes-Merton valuation method. The expected life of the instrument used in the model is adjusted, based on the Company's best estimate, for the effects of any exercise restrictions and behavioural considerations. The adoption of FRS 20 has resulted in a charge to the Profit & Loss Account of £12,384. A prior year adjustment has been made to the financial information set out for the six month period ended 31 March 2006 ( £706) and the year ended 30 September 2006 (£1,945) to apply charges to the Profit and Loss Account for share options granted or becoming vested in these periods. This has no impact on the net assets of the Company. In December 2005 the Company issued options as a minor part of the consideration for the acquisition of rights to the BHP Billiton diamond exploration database for Finland. As the main consideration comprised various reciprocal rights it is difficult to isolate and reliably estimate the value of the option part-consideration other than by assessing the fair value of these options. Consequently the intangible assets have been increased during the 6 month period ended 31 March 2006 and subsequent accounting periods by £16,733. FRS 20 has not been applied to share based payments which had vested prior to 1 October 2005 which comprised warrants to subscribe for 1,500,000 shares issued to the directors of the Company and warrants to subscribe for 1,500,000 shares issued to each of W.H. Ireland (the Company's broker at the time of AIM admission and the Company's Nomad, Ruegg & Co, all exercisable at 2p per share. FRS 25 - Financial Instruments In January 2006 the Company issued 17,777,778 free warrants exercisable at 3.5p as part of a share placing. The fair value of these warrants is estimated at £50,723 and this amount has been re-assigned from the Share Premium Reserve to the Option Reserve and a prior year adjustment has been made accordingly. 2. Loss per share Loss per share has been calculated on the attributable loss for the period and the weighted average number of shares in issue during the period. Six months to Six months to Twelve 31 March 2007 31 March 2006 months to 30 Unaudited Unaudited September As restated 2006 As restated £ £ £ Loss (£) (97,598) (97,759) (181,154) Weighted average shares in issue (No.) 105,291,267 79,672,924 87,750,156 Basic loss per share (pence) (0.09) (0.12) (0.21) The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share. This is because the exercise of share warrants would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of FRS 14. 3. Reconciliation of operating loss to net cash outflow from operating activities Six months to Six months Twelve 31 March to months to 30 2007 31 March September 2006 2006 Unaudited Unaudited As restated As restated £ £ £ Operating loss (104,949) (104,121) (195,408) Depreciation - - - Non-cash movement in 12,384 706 1,585 reserves Decrease/(increase) in 24,560 (12,199) 2,317 debtors (Decrease)/increase in (20,786) 38,413 13,004 creditors Net cash outflow from operating activities (88,791) (77,201) (178,142) 4. Reconciliation of cash flow to movement in net funds Cash at bank and in hand £ Increase in cash in the period 280,005 Cash outflow from decrease in funds and - lease financing Cash inflow from decrease in liquid - resources Change in net funds resulting from cash 280,005 flows Net funds at 30 September 2006 384,190 Net funds at 31 March 2007 664,195 5. Related party transactions The Company was an associated undertaking of Tertiary Minerals plc which held 23.45% of the issued ordinary share capital until 9 February 2007 when a share issue diluted this holding to 18.33%, at which point the Company ceased to be an associate. 6. Interim report Copies of this interim report will be sent to all shareholders and are available from Sunrise Diamonds plc, Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2LP, United Kingdom, and is also available on its website at www.sunrisediamonds.com This information is provided by RNS The company news service from the London Stock Exchange

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