Kopane Diamond Developments PLC

December 01, 2008 02:00 ET


                                      KOPANE DIAMOND DEVELOPMENTS Plc
                                        ("Kopane" or the "Company")
                                             OPERATIONS UPDATE
1 December 2008

                                   SUSPENSION OF PRODUCTION AT LIQHOBONG
Kopane  Diamond  Developments Plc (the "Company") today announces that, as a  consequence  of  the  current
severe  economic and market turbulence which has caused diamond prices to fall significantly over the  last
two months, its 75% owned subsidiary Liqhobong Mining Development Company (Pty) Ltd ("LMDC") has determined
to  suspend  production from its Satellite Plant at Liqhobong, Kingdom of Lesotho, with  immediate  effect.
This decision has the full support of the Government of Lesotho, the holder of the 25% minority interest in

Rough  diamond prices available to LMDC have fallen by some 30 - 50% since October 2008 and it is, as  yet,
unclear when they will return to previously prevailing levels. Now that work at the Liqhobong site for  the
Definitive Feasibility Study has been completed, particularly by the treatment by the Satellite Plant of  a
total  of  33,921  tonnes of bulk samples from each of the four facies of the Main Pipe,  the  Company  now
considers that it is inappropriate to continue to produce at the current small-scale, incurring a  material
cash loss.

Over  the last two months, production at the small scale Satellite Plant has been running at its name-plate
capacity  of  60  tonnes  per  hour, from a blend of Satellite Pipe and Main  Pipe  kimberlites  and  plant
availability and diamond recovery performances have been excellent. The Satellite Plant will now be  placed
on  a  care  and  maintenance  footing in readiness for re-starting operations once  the  economic  outlook

The Company announced on 17 November 2008 a substantially increased interim resource statement for the Main
Pipe which showed an indicative in-situ diamond value of $2.54 billion, consisting of 76 million tonnes  of
kimberlite  at an average grade of 39.1 carats per hundred tonnes at a run of mine value of $86 per  carat.
This is a 215% increase in the value of resource as published in the Pre-Feasibility Study in July 2007.

In  its  quest to conserve cash in this difficult financial environment, the Company is taking measures  to
scale-back  corporate  overheads  and continues to assess its current  funding  requirements.  The  Company
continues to be committed to the timely completion of the Definitive Feasibility Study.

Tim Read, Executive Chairman of the Company, commented today: "I made it clear in my letter to shareholders
in  our  Annual Report, published last week, we would take all steps necessary to preserve the Company  and
its  principal assets. The suspension of mining operations at Liqhobong will conserve cash and prevent  the
unnecessary  and  unprofitable depletion of our diamond resources. It is our  opinion  that  rough  diamond
prices  will recover in the longer term once consumer confidence is restored. It is our strategic focus  to
advance  the  appraisal and development of the Liqhobong Main Pipe Project to take full advantage  of  this
recovery  when  it occurs. Both the Company's and general market's view is that the medium  and  long  term
outlook for diamond prices is very robust given the projected shortfall in supply."

About Kopane

Kopane  is a diamond producer, developer and explorer with core projects at Liqhobong in Lesotho,  Southern
Africa. The Liqhobong operations are operated by Liqhobong Mining Development Company ("LMDC") which is 75%
owned by Kopane and 25% by the Government of Lesotho ("GoL"). As a result of the successful development  of
the operations at Liqhobong and the delineation of a substantial geological resource in the Main Pipe, LMDC
was, in February 2007, granted a 20 year mining licence for the Main Pipe by the GoL.

LMDC has to the end of October 2008 produced over 340,000 carats of diamonds since operations commenced  at
the  end  of  2005. The principal development project is the Main Pipe which has an indicated and  inferred
resource of nearly 30 million carats and has the potential to produce at a rate of over one million  carats
per annum.

Kopane  also  has  a  joint  venture to explore for diamonds in Finland, managed  and  financed  by  Mantle

The Company is listed on AIM (and is also traded through the Plus Market), ticker symbol: KDD.

For further information contact:                     
Kopane Diamond Developments Plc                      Threadneedle Communications
Tim Read, Executive Chairman                         Laurence Read/Graham Herring
James Cable, Finance Director                        +44 (0) 207 653 9850
+44 (0) 20 7529 7502

Canaccord Adams Limited
Robert Finlay
Mike Jones
+44 (0) 20 7050 6500

e-mail: ir@kopanediamonds.com
website: www.kopanediamonds.com

Contact Information

  • Kopane Diamond Developments PLC