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Preliminary results announcement for the year ended 30 June 2009 (unaudited)

Good results in a very difficult trading environment

Recovery of 507 carat diamond at Cullinan

29 September 2009

Petra Diamonds Limited (“Petra” or “the Company” or “the Group”), the international diamond mining group, announces its preliminary results (unaudited) for the year ended 30 June 2009 (“the Period”).

Today the Company is also pleased to announce the recovery at Cullinan of an extraordinary white diamond of 507.55 carats, as well as three other special white diamonds of 168.00, 58.50 and 53.30 carats. At 507 carats, the diamond ranks as one of the top 20 largest high quality rough diamonds ever found.

Operational and financial highlights for the Period

• Production of 1,099,367 carats, a fivefold increase (2008: 200,287 carats)
• Mine gross revenue: US$94.4 million, a 22.2% increase (2008: US$77.3 million)
• Group revenue* US$69.3 million (2008: US$76.9 million)
• Profit from mining activity* (before depreciation) US$7.8 million (2008: US$38.8 million);
• EBITDA (adjusted) loss* US$8.6 million (2008: US$25.5 million); 2009 EDITDA (adjusted) before exploration expenditure of US$13.7 million (now largely discontinued) would have been US$5.1 million, a strong result given the very weak diamond prices for much of the Period
• Net increase in production and sales largely due to Cullinan mine coming on stream in July 2008 and Williamson in November 2008, offset by the falls in rough diamond prices across all operations in line with market conditions
• Petra took over operations at Cullinan 16 July 2008 and all integration and initial project objectives were met. 888,595 carats were produced, including two very rare and valuable blue diamonds. A 39.19 carat blue diamond sold as a rough stone in October 2008 achieved US$8.8 million, and a 7.03 carat blue diamond sold as a polished stone (cut from a 26.58 carat rough) achieved US$9.4 million (US$1,349,752 per carat) on auction in May 2009, establishing a new auction record price per carat and the highest auction price for a fancy vivid blue diamond
• Petra acquired a 75% interest in the Williamson mine in Tanzania for US$10 million effective 10 November 2008; results from the ongoing expansion feasibility study support the development of the resource to a large tonnage operation
• Group resource update of 262 million carats (FY 2008: 265 million carats)
• Petra announced its withdrawal in December 2008 from all exploration activities in Angola (Alto Cuilo and Luangue), reducing annual exploration spend by US$25 million

Current trading

• The US$20 million convertible bond due to mature in September 2009 was extended to March 2011
• The first Petra tenders of FY 2010 held in July and September recorded good prices, and reaffirmed management’s opinion that prices achieved in June are holding firm and that a sustained recovery in diamond prices is probable
• In early September 2009 the Kimberley Underground new order mining right was registered and Petra is confident that the remaining conditions (note to this announcement 5.c) to complete the Kimberley Underground acquisition will be met in the near future

* In accordance with IFRS, Petra accounts for its interest in Cullinan under the gross method of proportional consolidation, recognising 50% of total revenue which includes a 13% minority interest. The Group has therefore proportionately consolidated 50% (joint venture interests held 50% Petra, 50% Al Rajhi Holdings W.L.L.) of the results of the Cullinan mine, which after the deduction of 13% in respect of the BEE minority interests gives the 37% attributable to the Group. Gross revenue and gross production is 100% Cullinan, attributable numbers are as noted above.

Adonis Pouroulis, Chairman, said, “This has been a remarkable period for the Group, in which we have grown our diamond production fivefold to surpass one million carats, a core strategic milestone. The Petra business is now geared for further growth, managing as we do one of the world’s largest diamond resources. As the diamond market continues to show positive signs of recovery, we are well placed to benefit from the economic potential of our quality mining assets.”

SUMMARY OF RESULTS (unaudited)

	12 months to 30 June 2009	12 months to 30 June 2008
	US$ million	US$ million
Revenue ¹	69.3	76.9
Mining and processing costs	(64.0)	(37.7)
Other direct income / (costs)	2.5	(0.4)
Profit from mining activity ²	7.8	38.8
Other operating income	3.2	1.1
Exploration expense ²	(13.7)	(9.5)
Corporate overhead ²	(5.9)	(4.9)
EBITDA ³	(8.6)	25.5
Impairments	(75.2)	-
Depreciation	(11.6)	(7.1)
Amortisation	(3.3)	(3.8)
Share based expense	(2.3)	(1.6)
Unrealised foreign exchange gain/(loss)	13.4	(4.6)
Net finance (expense)/income	(6.3)	0.8
Profit/(loss) from discontinued operations	1.6	(1.4)
Tax credit/(charge)	3.4	(5.9)
Net (loss)/profit after tax - Group4	(88.9)	1.9
Basic and diluted loss per share attributable to the equity holders of the parent company – cents4	(49.37)	(3.93)
Cash at bank	11.05	37.4

Notes:

1. The results for the Period are all for the full year other than in respect of the Cullinan mine (from 15 July 2008, the effective date of acquisition of the mine by the Petra Diamonds Cullinan Consortium) and the Williamson mine (from 10 November 2008, the effective date of the acquisition of a 75% interest in the mine)
2. Stated before depreciation, amortisation of intangibles, interest paid, foreign exchange gains and losses, asset impairment charges and share based payments
3. EBITDA disclosures are “adjusted EBITDA”, being stated before share based expense, foreign exchange gains and losses and asset impairment charges.
4. Stated after minority interests (BEE partners Cullinan, Koffiefontein and Sedibeng) of US$1,931,222

Analyst presentation and webcast

A presentation for analysts will be held at 9:30am on 29 September 2009 at the offices of Buchanan Communications, 45 Moorfields, London EC2Y 9AE.

A live webcast of the analyst presentation will be available on Petra’s website and a recording of this will be available on the website hereafter.

To download photos or video footage of the remarkable 507 carat diamond recovered at Cullinan, please visit http://media.buchanan.uk.com/petra_diamonds.htm

Preliminary results for the year ended 30 June 2009 (unaudited) (PDF – 192KB)

For further information, please contact:

Cathy Roberts
Telephone: +44 20 7318 0452
Petra Diamonds, London
cathyr@petradiamonds.com

Bobby Morse / James Strong
Telephone: +44 20 7466 5000
Buchanan Communications
bobbym@buchanan.uk.com

James Duncan / Nicola Taylor
Telephone: +27 11 880 3924
Russell and Associates, Johannesburg
james@rair.co.za / nicola@rair.co.za

Adrian Hadden
Telephone: +44 20 7523 8000
Collins Stewart, London

Notes to Editors:

About Petra Diamonds

Petra Diamonds is a leading supplier of rough diamonds. A number of acquisitions have established Petra as one of the world’s largest independent diamond groups by resources, with a total resource base of 262 million carats. Petra has seen its annual production rise fivefold in the year to June 2009 to over 1 million carats and the Company’s objective is to continue to increase supply and develop its stature as a world-class diamond group.

In South Africa, Petra has interests in five producing mines – Cullinan, Koffiefontein, Helam, Sedibeng and Star - and has also agreed to acquire, from De Beers, the Kimberley Underground mines. In Tanzania, Petra has a 75% interest in the Williamson mine. These mines are noted for the production of valuable diamonds, but in particular the Cullinan mine is famed as the source of the largest rough gem diamond ever found. More recently an internally flawless, fancy vivid blue diamond of 7.03 carats from the Cullinan mine sold for US$9.4 million in May 2009, the highest price ever paid for any gemstone sold at auction, and a white diamond of over 507 carats was recovered in September 2009.

Petra conducts all its operations according to the highest ethical standards, and will only work in countries which are members of the Kimberley Process.

The Company is quoted on the AIM market of the London Stock Exchange (AIM: PDL).