Kopane Diamond Developments PLC
LSE : KDD

March 30, 2009 02:00 ET

KDD Interim Report for the six months ended 31 December 2008

                                            Kopane Diamond Developments PLC

                                                     PRESS RELEASE

30 March 2009
                                                           
                                                           
                               Interim Report for the six months ended 31 December 2008

Highlights for the second half of calendar 2008 for Kopane Diamond Developments Plc ("Kopane" or "the Company") were
as follows:

*       Publication of an Interim Resource Statement showing a substantially increased resource of the Liqhobong Main
        Pipe.
        
*       Completion of bulk sampling, core and large diameter drilling ("LDD") programmes as part of the Definitive
        Feasibility Study ("DFS") for the Main Pipe project.

*       Sales of $3.1 million including sale of a premium 13.32 carat vivid yellow stone at $35,000 per carat
        (comparative period in 2007 - $3.8 million).

*       Loss of £3.1 million for the period (comparative period in 2007 - loss of £2.3 million).

*       Suspension of production at 1 December 2008 at Liqhobong due to a very significant fall in the prices
        obtainable for rough diamonds.

*       Progression of funding for the power line project to connect Liqhobong to grid electricity.

*       Cash balance at 1 March 2009 was £0.2 million
    
    
Post 31 December 2008

    
    
*       Placing of 50 million shares at 3.5p with Obtala Resources Plc, raising approximately £1.7 million after
        expenses.
        
*       Appointment of Mr. Francesco Scolaro as Non Executive Chairman.

Definitive Feasibility Study

Significant progress was made on the DFS summarised as:
*       Total resource tonnage of 76 million tonnes, up 79% on the Pre-Feasibility Study ("PFS") statement published
        last year of 42 million tonnes.
*       Increase in the average grade to 39.1 carats per hundred tonnes ("cpht") (PFS - 27.8 cpht).
*       Increase of 156% in the gross diamond resource to 29.6 million carats (PFS - 11.5 million carats).
*       Increase in the average run of mine carat value to $86 (PFS - $70).
*       Increase in the indicative value of the Main Pipe by 213% to $2.5 billion.
*       Completion of a 25 hole LDD programme.
*       Completion of a 1,705 metre diamond drilling programme.
*       Completion of a 33,921 tonne surface bulk sample programme producing 12,514 carats.


------------------------------------------------------------------------------------------------------
Category            Attributable to LMDC (100%)                  Net Attributable to Kopane (75%)
------------------------------------------------------------------------------------------------------
MAIN PIPE           Tonnes        Grade         Contained        Tonnes        Grade         Contained
Mineral Resources   (millions)    (cpht)        Diamonds         (millions)    (cpht)        Diamonds
                                                (million                                     (million
                                                carats)                                      carats)
------------------------------------------------------------------------------------------------------
                                                                                             
Measured            -             -             -                -             -             -
------------------------------------------------------------------------------------------------------
                                                                                             
Indicated           16.00         34.12         5.50             12.00         34.12         4.12
------------------------------------------------------------------------------------------------------
                                                                                             
Inferred            59.60         40.42         24.08            44.70         40.42         18.06
------------------------------------------------------------------------------------------------------
                                                                                             
Total               75.60         39.12         29.58            56.70         39.12         22.18
------------------------------------------------------------------------------------------------------
                    
The  Company  has  been progressing its DFS in respect of the Main Pipe, at Liqhobong, Kingdom  of  Lesotho,  and  has
completed  its  advanced geological evaluation programme. This work included a programme of bulk sampling  and  narrow
diameter  core  drilling  and  has resulted in a re-interpretation of the geological model  of  the  Main  Pipe.  This
information has been used by independent mining and geological consultants ACA Howe International Limited ("Howe")  to
provide a revised interim resource estimate as follows:

The  bulk  sampling programme consisted of a series of samples extracted and processed to test the grade of  the  four
identified  facies,  namely  the  K2,  K4, K5 and K6, totalling 33,921 dry tonnes,  to  provide  grade,  diamond  size
distribution and diamond value data for each unit. A total of 12,514 carats were produced from the bulk samples, at  a
bottom cut-off of 1 millimetre.

The  programme  of narrow (HQ/NQ) diameter core drilling comprised 4 holes with a total depth of 1,705 metres  plus  a
further 5 geotechnical holes with a total depth of 1,247 metres. This programme has permitted a recalculation  of  the
dimensions of the Main Pipe, resulting in a much larger resource tonnage of 75.6 million tonnes, a 79% increase on the
42 million tonnes resource identified in the 2007 pre-feasibility study.

The  resource  categorization  and limits are based on the same parameters used for  the  2007  PFS  interim  resource
estimate. The average grade has increased to 39.1 cpht (PFS - 27.8 cpht), giving a 156% increase in the gross  diamond
resource of 29.6 million carats (PFS - 11.5 million carats). This resource has been calculated to a 2,140 metre  depth
level  only, which is a mean depth of 420 metres below surface. The mineralisation is open at depth, with one  earlier
diamond drill hole remaining in kimberlite to the end of the hole at a depth of 650 metres below surface.

Valuation of the bulk samples of $86 per carat, for run of mine production, has been determined by putting the  parcel
out  to  independent valuation. This compares with $70 per carat run of mine valuation used in the PFS. This valuation
was  obtained  in  September 2008. The market for rough diamonds had started to show falls in early August  2008  from
summer  peaks  and  further significant price deterioration has subsequently been seen. By  the  time  Kopane  resumes
production from the Satellite Plant or commences production from the new Main Plant, estimated in or after  2011,  the
Directors believe that the market for rough diamonds should have experienced some recovery.

Applying  the value generated by the bulk sample of $86 per carat, the indicative value of the Main Pipe has increased
by  213% to $2.5 billion (29.6 million carats at $86 per carat) from the $0.81 billion (11.5 million carats at $70 per
carat)  shown  in  the 2007 PFS resource statement. Due to changes in geometry of the various facies with  depth,  the
weighted  average  grade  of  the bulk sample parcel does not reflect the weighted average  grade  of  the  Main  Pipe
kimberlite.

The  $86 per carat run of mine valuation does not include the positive impact of large and bonanza stones, which could
provide  material economic enhancement to the project value. This is illustrated by the sale, at the end of  2006,  of
four  stones which totalled 78 carats in aggregate and had a total value of $1.43 million and by the sale in July 2008
of  three premium stones, totalling, 27 carats for $0.63 million. All of these stones were sourced from the K5 facies.
In  addition, Kopane has seen the occurrence in the Main Pipe of several large pieces of polycrystalline boart of over
100  carats, including one of 263 carats. This is consistent with the report of ACA Howe in respect of the PFS, in mid
2007, which identified two potential areas of upside for the economics of the Main Pipe project, namely ore grade  and
stone value.

In  November 2008, the LDD programme, using a Prakla RB-40 RC drill rig, was completed. This was a 25 hole  programme,
totalling  4,415  metres  of  drilling and representing some 1,800 tonnes of mini  bulk  samples.  These  samples  are
currently  being  treated at Liqhobong in a custom-built dense media separation ("DMS") plant with  a  capacity  of  5
tonnes  per hour, under the QA/QC supervision of Howe. Once these samples have been processed, the Company  will  have
depth continuity data on grade for each of the facies, which should enable more of the resource to be classified  into
the  higher  definition  measured  and  indicated categories. It is anticipated that  a  revised  resource  statement,
incorporating this additional data, will be published in May 2009.

The  Company  is close to finalising a Memorandum of Understanding between its subsidiary Liqhobong Mining Development
Company,  the Lesotho Electricity Company, the Government of the Kingdom of Lesotho and a lending bank, in respect  of
funding  of  the  construction  of an electrical power line to the Company's mine at  Liqhobong.   The  Memorandum  of
Understanding contemplates funds being lent by the bank to LEC to fund the construction of the power line  from  LEC's
sub-station  at  Ha  Lejone,  which is approximately 30 kilometres from Liqhobong.  In  addition,  LEC  and  GOL  will
contribute  funds towards the cost of the project and GOL has agreed to provide a sovereign guarantee to the  bank  in
respect of the loan funding. LMDC will service the loan and its repayment on terms to be agreed.

The  engineering  specifications of the power line, together with environmental impact assessment studies,  have  been
completed  in  readiness for an immediate start to the construction once funding is in place. It is planned  that  the
loan documentation will be finalised between the parties in the first half of 2009, with funds made available to allow
construction  to commence in the second half of the year, which should allow grid electricity to be connected  to  the
mine  site  by  the  end  of 2010. The availability of grid power will also mean that it would become  practicable  to
undertake a brown field expansion to increase the size of the Satellite Plant significantly from the current  capacity
of 425,000 tonnes per annum.


Production and Sales

As  a  consequence  of  the  current severe economic and market turbulence which has caused  diamond  prices  to  fall
significantly, starting in August 2008, Kopane's 75% owned subsidiary Liqhobong Mining Development Company  (Pty)  Ltd
("LMDC")  suspended production at Liqhobong on 1 December 2008. This decision was made with the full  support  of  the
Government of Lesotho, the holder of the 25% minority interest in LMDC.

Rough diamond prices attainable by LMDC have fallen by some 30 - 50% since early August 2008 in line with the rest  of
the  market and it is, as yet, unclear when they will return to previously prevailing levels. As most of the DFS  work
at  the  Liqhobong site, including the bulk sampling and the LDD drilling, had been completed, the Company saw  little
point in continuing the current small-scale operations and incurring a material cash loss.

Over  the two months preceding suspension, production at the small scale Satellite Plant had 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 had been excellent.  The operations remain closed and are unlikely to reopen  prior
to a strong recovery in the diamond market.

In  the  five  month period from 1 July 2008 until suspension of production at 1 December 2008 150,600 dry  tonnes  of
kimberlite  were processed, from a blend from the Satellite and Main Pipes, recovering 56,499 carats, of which  12,514
carats related to the DFS bulk sample programme and are retained in inventory. This compares with the six month period
to  December 2007 in which, 148,000 dry tonnes of kimberlite were processed, from a blend of Satellite and Main Pipes,
recovering  approximately  75,000  carats. In the five month period to December 2008,  the  blend  of  kimberlite  was
approximately  85%  from  the Main Pipe where the grade is lower but the carat values are higher  than  those  of  the
Satellite  Pipe.  In contrast, the ore blend in the second half of calendar 2007 was approximately equal  between  the
Main and Satellite Pipes.

In  the  period  under review, there were four sales in the period amounting to 72,731 carats, of which 16,749  carats
were  low grade industrial or boart stones, which had been accumulated over the calendar year. Sales revenues achieved
in  the period were $3.1 million, compared to the six month period to December 2007, in which there were five sales of
a  total  of  90,896  carats (13,321 carats boart), achieving revenues of $3.8 million. Average prices  per  carat  of
diamonds  sold  in  the current and comparative periods were similar. Prices for the first two sales  in  the  current
period were higher than the comparative period, offset by the lower prices achieved in the last two sales due to falls
in the market.

There was a further sale of 12,377 carats in January 2009 which realised $0.3 million. The Company has sold a total of
339,000 carats for $17 million since commencement of production in 2005.

The  Company  has  taken measures to reduce corporate overheads in order to conserve cash in this difficult  financial
environment  and continues to progress resolution to its funding requirements. In this regard, today the Company  also
announced that it has placed 50 million ordinary shares to raise approximately £1.7 million after expenses to  finance
work in respect of the DFS and for general working capital purposes.


The Finnish Joint Venture

The  Company's Finnish assets are being operated, financed and developed under a joint venture agreement  with  Mantle
Diamonds  Limited. Under this agreement, Mantle can earn up to a 70% interest in the Finnish assets  by  expending  $5
million,  including  producing a definitive feasibility study on the Lahtojoki property and  issuing  Kopane  with  10
million  shares  in Mantle, with a pre-IPO value of £2 million.  To date, Mantle has spent approximately  £668,000  in
respect of the feasibility study at Lahtojoki.

The Company owns 3.4 million shares in Mantle, which have an attributed value of £334,000.


Financial

The interim unaudited consolidated financial statements for the six months ended 31 December 2008 are attached.

These unaudited consolidated financial statements have been prepared on the basis of International Financial Reporting
Standards ("IFRS") as adopted by the European Union and implemented in the UK.

The consolidated net loss for the six months ended 31 December 2008 was £2.8 million (loss per share 1.6p) compared to
the  consolidated net loss of £2.2 million (loss per share 2.1p) for the same period last year. The consolidated  loss
for  the  period  is after expensing £0.1 million in respect of the fair value of share options issued  (2007  -  £0.2
million).  The loss has increased over the comparative period due primarily to lower sales proceeds, higher mining and
production  costs due to the cost of suspension of production, offset by lower depreciation resulting from  a  greater
expected life of the satellite plant and a lower exchange gain recognised in the income statement.

The  Company's main source of income during the period was from the sale of rough diamonds, amounting to £1.6  million
(2007  -  £1.9 million). The decrease over the corresponding period last year was due primarily to fewer carats  being
sold resulting from the retention in inventory of stones recovered in the DFS bulk sample.

Property,  plant  and equipment of £2.8 million in the consolidated balance sheet at 31 December  2008  (2007  -  £3.6
million) represent primarily the cost of the mine at Liqhobong, Kingdom of Lesotho, after depreciation and differences
on exchange.

The  intangible  assets of £5.0 million in the consolidated balance sheet at 31 December 2008 (2007  -  £6.5  million)
represent  primarily accumulated deferred exploration and evaluation costs in respect of the Company's exploration  of
the  Main Pipe at Liqhobong.  The Company's accounting policy in respect of these costs is to capitalise them  pending
determination  of  the  feasibility  of the project to which they relate. The reduction  in  intangible  assets  since
December  2007  results  from new expenditure in Lesotho being offset by the transfer of the  Finnish  assets  to  the
Company's investment in a joint venture at 30 June 2008, further offset by exchange movements.

The  Company's  investment  in  the joint venture is £2.1 million (2007 - nil). The available  for  sale  investments,
representing  the  Company's holding in Mantle Diamonds Limited, is £0.33 million (2007  -  nil),  which  reflects  an
impairment of £0.33 million, or 50%, since 30 June 2008.

Trade  and  other receivables due after more than one year of £2.6 million (2007 - nil) represent loans due  from  the
Finnish joint venture entities.


Current  assets  in  the  consolidated balance sheet at 31 December 2008 were £1.7  million  (2007  -  £3.0  million),
primarily  consisting of cash of £0.7 million (2007 - £1.9 million) and inventories of rough diamonds of £0.8  million
(2006 - £0.6 million).

The  Consolidated Income Statement has been presented under the 'nature of expense' method as permitted under IFRS  to
provide the most relevant presentation of information.

Outlook

The  Company  has today announced a placement of 50 million new ordinary shares with Obtala Resources Plc.,  to  raise
approximately £1.7 million (net). These funds have been raised to finance work in respect of the DFS and  for  general
working capital purposes.

The  Company's cash resources as at 1 March 2009 amounted to approximately £0.2 million and these funds together  with
the  funds  from the Placing, are projected to be exhausted in the third quarter of 2009 based on the Group's  current
planned expenditure.

Additional  working  capital,  of approximately £2.4 million, will be required to complete  the  DFS,  subject  to  no
material  overruns  or delays, and to fund the Company for the period following DFS completion until  it  is  able  to
arrange  funding  for the Main Pipe construction project, which is planned to take place at the end of  2010.  Further
work  in  respect of the DFS is discretionary and can therefore be carried out by the Company to the extent  that  the
Company has available funds.

In  view  of the Company's need for further working capital following today's placing the Board are reviewing all  the
alternative  strategic options available to the Company including how this additional working capital  need  might  be
funded.  Any further equity, or equity linked funding would be subject to shareholder approval.

Following the share placement with Obtala Resources Plc, Mr. Francesco Scolaro, Chairman of that company, will becomes
Non Executive Chairman of Kopane, in place of myself.  I will remain a Non Executive Director.

Tim Read
Executive Chairman

Corporate Information:
Stock Exchange listing   London AIM
Trading symbol           KDD
Shares in issue          169,611,283
Website                  www.kopanediamonds.com
E-mail address           enquiries@kopanediamonds.com

For further information contact:
Kopane Diamond Developments Plc
James Cable, Finance Director
+44 (0) 20 7963 9590
Threadneedle Communications
Laurence Read
+44 (0) 20 7653 9855
Canaccord Adams Limited
Mike Jones
Robert Finlay
+44 (0) 20 7050 6500
e-mail: ir@kopanediamonds.com
website: www.kopanediamonds.com




Consolidated balance sheet

As at 31 December 2008
                                                                     (Unaudited)      (Unaudited)      (Audited)
                                                                 As at 31 Dec 08  As at 31 Dec 07   As at 30 Jun
                                                                                                              08
                                                                           £'000            £'000          £'000
Assets                                                                                                                            
   Property, plant and equipment                                           2,833            3,624          3,179
   Intangible assets                                                       5,033            6,453          2,728
   Investments in joint venture entity                                     2,092                -          1,171
   Available for sale investments                                            333                -            667
   Trade and other receivables due after more than                                                              
   one year                                                                2,583                -          2,583
                                                                 -----------------------------------------------
Total non-current assets                                                  12,874           10,077         10,328
                                                                 -----------------------------------------------
                                                                                                                
                                                                                                                
   Inventories                                                               811              584            727
   Trade and other receivables - due within one year                         244              544            217
   Cash and cash equivalents                                                 651            1,913          4,729

                                                                 -----------------------------------------------
Total current assets                                                       1,706            3,041          5,673
                                                                 -----------------------------------------------
Total assets                                                              14,580           13,118         16,001
                                                                 -----------------------------------------------
                                                                                                                
Equity                                                                                                                            
   Issued share capital                                                    8,481            5,481          8,481
   Share premium                                                          24,933           22,303         24,933
   Merger reserve                                                          3,242            3,271          3,242
   Share-based payment reserve                                             1,131              800            987
   Foreign exchange translation reserve                                      580            (193)          (879)
   Retained loss                                                        (24,868)         (19,343)       (21,754)
                                                                                                                
                                                                 -----------------------------------------------
Total equity                                                              13,499           12,319         15,010
                                                                 -----------------------------------------------
                                                                                                                
                                                                                                                
   Trade and other payables                                                1,037              644            953
                                                                 -----------------------------------------------
Total current liabilities                                                  1,037              644            953
                                                                 -----------------------------------------------
                                                                                                                
    Deferred income                                                            -              123              -
    Provisions                                                                44               32             38
                                                                                                                
                                                                 -----------------------------------------------
Total non-current liabilities                                                 44              155             38
                                                                 -----------------------------------------------
                                                                                                                
                                                                 -----------------------------------------------
Total liabilities                                                          1,081              799            991
                                                                 -----------------------------------------------
                                                                                                                
                                                                 -----------------------------------------------
Total equity and liabilities                                              14,580           13,118         16,001
                                                                 -----------------------------------------------
                                                                                                                

                                                                                            
                                                 


Consolidated income statement

For the 6 months ended 31 December 2008
                                                               (Unaudited)      (Unaudited)     (Audited)
                                                             6 month ended   6 months ended    Year ended
                                                                 31 Dec 08        31 Dec 07     30 Jun 08
                                                                     £'000            £'000         £'000
                                                                                                         
Revenue                                                              1,615            1,868         3,422
Changes in inventories                                                  83             (10)           134
Mining and processing costs                                        (2,092)          (1,448)       (3,432)
Employee benefits expense                                          (1,038)          (1,225)       (2,398)
Depreciation expense                                                 (543)          (1,029)       (1,073)
Gain on disposal of interest in subsidiary undertaking                   -                -           325
Impairment of available for sale investments                         (334)                -             -
Gain/(loss) on exchange                                                 67              554           114
Other expenses                                                       (898)          (1,024)       (1,815)
                                                                                                         
                                                              -------------------------------------------
Operating loss                                                     (3,140)          (2,314)       (4,723)
                                                              -------------------------------------------
                                                                                                         
Investment income                                                       40               66            93
Share of loss in joint venture                                        (14)                -          (29)
                                                              -------------------------------------------
                                                                                                         
                                                              -------------------------------------------
Loss for the period                                                (3,114)          (2,248)       (4,659)
                                                              -------------------------------------------
                                                                                                         
Basic and diluted loss per share (Pence)                              1.8p             2.1p          4.1p
                                                                                                         
                                                                                                         
                                                                                                         



Consolidated statement of cash flows

For the 6 months ended 31 December 2008
                                                                   (Unaudited)      (Unaudited)    (Audited)
                                                                 6 month ended   6 months ended   Year ended
                                                                        Dec 08        31 Dec 07    30 Jun 08
                                                                         £'000            £'000        £'000
Cash flows from operating activities                                                                               
Operating loss for the period                                          (3,140)          (2,314)      (4,723)
Adjustments for:                                                                                            
Depreciation                                                               543            1,029        1,073
Impairment of available for sale investments                               334                -            -
Exchange Difference                                                        159            (565)        (272)
Equity-settled share-based payment transactions                            143              211          398
Profit on disposal of interest in subsidiary                                 -                -        (325)
                                                                 -------------------------------------------
                                                                       (1,961)          (1,639)      (3,849)
                                                                                                            
(Increase) in trade and other receivables                                 (14)            (417)        (128)
(Increase)/decrease in inventories                                          42               34        (189)
Increase in provisions for liabilities and charges                           6                6           13
Increase/(decrease) in trade and other payables                           (16)            (171)          199
                                                                 -------------------------------------------
                                                                 -------------------------------------------
Net cash used in operating activities                                  (1,943)          (2,187)      (3,954)
                                                                 -------------------------------------------
                                                                 -------------------------------------------
                                                                                                            
Cash flows from investing activities                                                                                          
Interest received                                                           40               66           93
Acquisition of intangibles                                             (1,994)            (238)      (1,242)
Acquisition of property, plant and equipment                             (181)            (182)        (252)
                                                                 -------------------------------------------
                                                                 -------------------------------------------
Net cash used in investing activities                                  (2,135)            (354)      (1,401)
                                                                 -------------------------------------------
                                                                 -------------------------------------------
                                                                                                            
Cash flows from financing activities                                                                                          
Proceeds from issue of share capital                                         -               30        6,030
Payment of transaction costs                                                 -                -        (370)
                                                                 -------------------------------------------
                                                                 -------------------------------------------
Net cash from financing activities                                           -               30        5,660
                                                                 -------------------------------------------
                                                                 -------------------------------------------
                                                                                                            
Net increase/(decrease) in cash and cash equivalents                   (4,078)          (2,511)          305
Cash and cash equivalents at start of period                             4,729            4,424        4,424
                                                                                                            
                                                                 -------------------------------------------
                                                                 -------------------------------------------
Cash and cash equivalents at end of period                                 651            1,913        4,729
                                                                 -------------------------------------------
                                                                 -------------------------------------------
                                                                                                 
                                                                                                 
                                                                                                 



Consolidated statement of changes in shareholders' equity

For the 6 months ended 31 December 2008
                                             Share      Share     Merger  Share based   Foreign   Retained      Total
                                           capital    premium    reserve      payment  exchange   earnings     equity
                                                                              reserve   reserve                      
                                             £'000      £'000      £'000        £'000     £'000      £'000      £'000
                                                                                                                     
Opening balance 1 July 2007                  5,468     22,286      3,271          589     (416)   (17,095)     14,103
Loss for the period                              -          -          -            -         -    (2,248)    (2,248)
Foreign exchange loss                            -          -          -            -       223          -        223
                                           --------------------------------------------------------------------------
Total recognised loss for period                 -          -          -            -       223    (2,248)    (2,025)
                                           --------------------------------------------------------------------------
Shares issued for cash                          13         17          -            -         -          -         30
Share based payments                             -          -          -          211         -          -        211
                                           --------------------------------------------------------------------------
As at 31 December 2007                       5,481     22,303      3,271          800     (193)   (19,343)     12,319
                                           --------------------------------------------------------------------------
                                           --------------------------------------------------------------------------
Loss for the period                              -          -          -            -         -    (2,411)    (2,411)
Foreign exchange loss                            -          -          -            -     (686)          -      (686)
                                           --------------------------------------------------------------------------
Total recognised loss for period                 -          -          -            -     (686)    (2,411)    (3,097)
                                           --------------------------------------------------------------------------
Shares issued for cash                       3,000      3,000          -            -         -          -      6,000
Share based payments                             -          -          -          187         -          -        187
Share issue costs                                -      (370)          -            -         -          -      (370)
Disposal of share in joint venture               -          -       (29)            -         -          -       (29)
                                           --------------------------------------------------------------------------
As at 30 June 2008                           8,481     24,933      3,242          987     (879)   (21,754)     15,010
                                           --------------------------------------------------------------------------
                                           --------------------------------------------------------------------------
Loss for the period                              -          -          -            -         -    (3,114)    (3,114)
Foreign exchange gain                            -          -          -            -     1,459          -      1,459
                                           --------------------------------------------------------------------------
Total recognised gain/(loss) for period          -          -          -            -     1,459    (3,114)    (1,655)
                                           --------------------------------------------------------------------------
Share based payments                             -          -          -          144         -          -        144
                                                                                                                     
                                           --------------------------------------------------------------------------
As at 31 December 2008                       8,481     24,933      3,242        1,131       580   (24,868)     13,499
                                           --------------------------------------------------------------------------
                                           --------------------------------------------------------------------------
                                                                                                                     


Notes to the consolidated financial statements

These  unaudited consolidated financial statements have been prepared on the basis of the recognition requirements  of
International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU") and implemented  in  the
UK  and  their interpretations adopted by the International Accounting Standards Board ("IASB").  They have also  been
prepared in accordance with those parts of the Companies Act 1985 applicable to those companies reporting under IFRS.


1.  NATURE OF OPERATIONS AND GOING CONCERN

The Group owns diamond interests in Lesotho and Finland.  In Lesotho, production continued from both the Satellite and
Main  Pipes  until  1 December 2009 when production was suspended due to falling rough diamond prices  and  the  plant
placed  on  a  care  and  maintenance basis. There were four sales of rough diamonds in  the  reporting  period.   The
Definitive Feasibility Study into the viability of the Main Pipe continued through the period.

The  Company's Finnish properties are managed by Mantle Diamonds Limited under a joint venture whereby Mantle can earn
up to 70% interest in the properties by spending $5 million on exploration and evaluation on the Properties, including
a  bankable  feasibility study in respect of the Company's Lahtojoki property, and by paying Kopane 10 million  Mantle
shares over three years. The directors consider the planned Finnish expenditure is fully funded.

The  placement  of the operation at Liqhobong onto a care and maintenance footing has reduced the cash  drain  on  the
Company's financial resources. On 30 March 2009, the Company announced the placement of 50 million ordinary shares  to
raise  £1,750,000  in  order to finance its planned discretionary work in respect of the DFS and for  general  working
capital  purposes. The principal focus of the Company in 2009 is the completion of the DFS and the ESIA in respect  of
the  Main Pipe which will be largely funded from the proceeds of the Placing. Further working capital will be required
in  due course to fund the Company up to the point of funding of the Main Pipe construction project assumed to  be  at
the  end  of 2010.  Given the stage of the project and the positive initial findings of the DFS, the directors believe
that  the  necessary funds will be available and therefore the financial statements have been prepared  on  the  going
concern basis.

The  consolidated financial statements do not include any adjustment that would result from the Company or any of  its
subsidiary undertakings ceasing to operate as a going concern.

2   ACCOUNTING POLICIES

Basis of consolidation
(i)  Subsidiaries
Subsidiaries  are  entities  controlled by the Company. Control exists when the Company has  the  power,  directly  or
indirectly,  to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
In  assessing  control, potential voting rights that presently are exercisable or convertible are taken into  account.
The  financial  statements of subsidiaries are included in the consolidated financial statements from  the  date  that
control commences until the date that control ceases.

(ii)  Joint ventures
A  joint  venture  is  an undertaking over which the Group is in a position to exercise joint control.   The  results,
assets  and  liabilities  of joint ventures are incorporated in these financial statements using  the  equity  method.
Under  the  equity method of accounting the Group's share of the net assets and the profit or loss for the period  are
recognised in the balance sheet and income statement respectively.

(ii)  Transactions eliminated on consolidation
Intra-group  balances and any unrealised gains, losses, income or expenses arising from intra-group  transactions  are
eliminated in preparing the consolidated financial statements.

(iii)  Goodwill
All  business  combinations are accounted for by applying the purchase method. Goodwill arises on the  acquisition  of
subsidiaries,  associates and joint ventures. Goodwill represents the difference between the cost of  the  acquisition
and the fair value of the net identifiable assets acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units  and
is  tested annually for impairment.  Goodwill arising on acquisition is capitalised and shown within fixed assets. The
excess of net assets over consideration paid on an acquisition is recognised directly in profit or loss.

Deferred Exploration and Evaluation Costs
These  comprise  costs directly incurred in exploration and evaluation as well as the cost of mineral licences.   They
are  capitalised as intangible assets pending the determination of the feasibility of the project.  When the existence
of  economically recoverable reserves is established the related intangible assets are transferred to property,  plant
and equipment and the exploration and evaluation costs are amortised over the estimated life of the project.  Where  a
project is abandoned or is determined not economically viable, the related costs are written off.

The  recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common  to  the
natural  resource sector.  These include the extent to which a Company can establish economically recoverable reserves
on  its  properties,  the  ability of the Company to obtain necessary financing to complete the  development  of  such
reserves and future profitable production or proceeds from the disposition thereof.

Share-based payment transactions
The  share option programme allows Group employees to acquire shares of the Company. The fair value of options granted
is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date
and  spread  over  the period until the options vest unconditionally to the employee. The fair value  of  the  options
granted is measured using the Black-Scholes model, taking into account the terms and conditions upon which the options
were granted. The amount recognised as an expense is adjusted to reflect the  actual number of share options that
vest, except if the change is due to market based conditions not being satisfied.

Revenue recognition
Revenue represents gross revenue from the sale of rough diamonds before selling costs.  Revenue is recognised  at  the
point of acceptance of customers' bids for the rough diamonds.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the rate applicable.

Property, plant and equipment - Depreciation
Depreciation  is  charged to the income statement at the following rates in order to write off  each  asset  over  its
estimated useful life.

*   Mining assets                                            20% on straight line basis
*   Fixtures and fittings                                    25% on reducing balance
*   Computer equipment                                       25% on reducing balance

The  residual value, if not insignificant, is reassessed annually.  The Company reviewed the remaining useful life  of
the Mining assets in the year ended 30 June 2008 and extended the write-off period until 30 June 2012.

Financial instruments
(i)  Non-derivative financial instruments
Non-derivative  financial instruments comprise trade and other receivables, cash and cash equivalents  and  trade  and
other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not  at  fair  value
through profit or loss, any directly attributable transaction costs, except as described below.  Subsequent to initial
recognition, non-derivative financial instruments are measured as described below. At 31 December 2008 the fair  value
equated to the historical cost for all non-derivative instruments.

A  financial  instrument is recognised if the Group becomes a party to the contractual provisions of  the  instrument.
Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire
or  if  the Group transfers the financial asset to another party without retaining control or substantially all  risks
and  rewards of the asset.  Regular purchases and sales of financial assets are accounted for at trade date, i.e.  the
date  that  the  Group  commits itself to purchase or sell the asset.  Financial liabilities are derecognised  if  the
Group's obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits.  Bank overdrafts that are repayable on demand  are
included as a component of cash flows from financing activities, for the purposes of the statement of cash flows.

Share capital
Incremental  costs directly attributable to issue of ordinary shares and share options are recognised as  a  deduction
from equity.

Loss per share
The  calculation  of basic loss per ordinary share on the net basis is based on the loss on ordinary activities  after
taxation  of  £3,114,000 and on 169,661,283 ordinary shares being the weighted average number of  ordinary  shares  in
issue  and ranking for dividend during the period.  The diluted loss per ordinary share is presented on the same basis
as the effect of the exercise of share options would be to decrease the loss per share.

Notes:
These  interim financial statements were approved by the directors on 25 March 2008. The Group's principal  accounting
policies  are  shown above. These policies are equivalent to those stated in the Annual Report for the year  ended  30
June 2008.

The  financial  information  for  the  six months ended 31 December 2008 and  31  December  2007  is  unaudited.   The
comparative  figures  for the year ended 30 June 2008 were derived from the group's audited financial  statements  for
that  period  as  filed  with the Registrar of Companies.  It does not constitute the financial  statements  for  that
period.   Those  financial statements received an unqualified audit report which did not contain any  statement  under
sections 237(2) or (3) of the Companies Act 1985.

No dividend is being declared or paid for the period.

Copies of this report are being sent to all shareholders. Additional copies are available from the Company's office at
Carlyle House 235-237 Vauxhall Bridge Road, London, SW1V 1EJ or the Company's website www.kopanediamonds.com.

Contact Information

  • Kopane Diamond Developments PLC