On 19 December, Petra Diamonds announced its road ahead for 2009 as being focused on building its cash-generative, world-class production portfolio. The decision was taken by the board in view of the global weakness in financial markets, the appropriate risk-weighted allocation of capital across Petra’s assets, and the medium term production and revenue growth achievable by investment into the Group’s world class production portfolio, as compared with continued spend on early stage exploration.

In the strategic exploration review the company has identified to reduce its annual exploration spend by some US$25 million. Its Botswana exploration campaign which is scaled down but highly focused will reduce spends to US$500,000 for the six months to June 2009. The company has earmarked an annual spend of US$500,000 in Botswana, the only group exploration spend going forward. Sierra Leone, which is the joint venture partner the company in the Kono project will now be individually funding the Kono advanced exploration project. Petra will have until December 2009, to elect to refund its partner for the 51 percent of the 2009 exploration spend, or to dilute its interest in Kono, which amounts to 51 percent. The company will withdraw from the Luangue project at Angola, where it had announced withdrawing from the Alto Cuilo project, earlier.

Johan Dippenaar, Chief Executive Officer, Petra Diamonds said: “Petra has reduced its exploration programme in order to focus resources on the development of its cash–positive producing operations as well as on exploration in Botswana, which requires minimal spend but is highly prospective”. The decision to focus on cash generative production at our world-class assets is the right move to enhance our growing business momentum. As one of the lower cost diamond producers, our portfolio of world-class assets, low levels of debt and our robust management team places the group in a strong position to benefit as soon as diamond prices normalise.”

The company has rapidly established itself as one of the world’s largest independent diamond groups, with a total resource base of 265 million carats and is aiming to bring this world-class resource base to account. The Group is on track to produce over 1 million carats in the full year to June 2009.