Motapa Diamonds Inc.

Motapa Diamonds Inc.

October 26, 2006 12:25 ET

Motapa Second Quarter Financial Statements and Interim MD&A

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 26, 2006) - Motapa Diamonds Inc. (TSX VENTURE:MTP) has filed its interim consolidated financial statements and its Management Discussion and Analysis for the 6 months ended August 31st, 2006, with the regulatory authorities through SEDAR. The interim consolidated financial statements were prepared by management in accordance with Canadian generally accepted accounting principles and were not reviewed by Motapa's auditors.


Highlights of Motapa's exploration activities during its second quarter of fiscal 2007 are:

- The Company began preparatory work for a planned bulk sampling program on its newly acquired Mothae kimberlite pipe, located in northern Lesotho, 6.5 km. north-west of the Letseng diamond mine. Work during the quarter included construction of an access road, site development and preliminary work on the design of a processing plant suitable for processing a 100,000 tonne bulk sample.

- The Company announced in the third quarter that it had entered into a letter agreement with Namdeb Diamond Corp. (Pty) Ltd. ('Namdeb') under terms of which Namdeb can earn a majority interest in Motapa's 100% owned Kavango and Kavango West licenses in Namibia. Namdeb can earn a 51% interest in the licenses by completing a two year work program mutually agreed by Motapa and Namdeb, and may earn an additional 14% interest by continuing to fully fund work on the project through to completion of a feasibility study. Namdeb is a Namibian company held equally by the Government of the Republic of Namibia and De Beers Centenary AG. The letter agreement is subject to completion of a due diligence by Namdeb on or before November 30, 2006.

- A heavy mineral sampling program planned for the 2006 dry season over the Lebiri license in Gabon was completed in the third quarter. Approximately 780 heavy mineral and geochemistry samples were collected and included follow-up of 40 aeromagnetic anomalies. Sample processing is currently underway.

- In Mozambique, the Company initiated a reconnaissance stream sediment sampling program covering its diamond interests in western Mozambique.

- The Company received the three licenses in Gabon for uranium, gold and manganese for which the Gabon Ministry of Mines, Energy, Oil and Hydraulic resources had previously approved verbally. The three licenses are subject to the previously announced letter agreement between the Company, Cameco Corporation, and Pitchstone Exploration Ltd.

- The Company also relinquished ground in Zambia, Namibia and Botswana that was deemed to be no longer of continuing interest.

Cash and cash equivalents decreased by $544,159 during the quarter ended August 31, 2006 (decrease in 2005: $1,437,352) to $3,994,140 (2005: $5,375,083) as a result of operational expenditure.

Interest income increased slightly to $39,018 (2005: $35,576) and a foreign exchange loss of $23,748 was recorded (2005: $278,287) in line with the US dollar/Canadian dollar exchange rate, interest rates and average cash balance holdings for the period.

Corporate expenditure for the quarter ended August 31, 2006 increased to $188,988 compared to $156,675 in the prior year over the same period. The increase is attributable to the establishment and staffing of a Canadian office, increased corporate marketing activities and the recognition of an incentive stock option expense.

Exploration expenditure totaled $422,974, (2005: $1,051,264) with the largest expenditure of $125,470 (2005: $238,657) occurring in Gabon where a total of $98,468 (2005: $1,533) was attributable to follow-up geochemical sampling activities over aeromagnetic targets. In Mozambique, exploration expenditures totaled $116,240 (2005: $nil) of which $45,041 was attributable to license fees and $66,252 to orientation sampling work. In Namibia, expenditures were reduced to $6,805 (2005: $693,246) as the Company finalized a letter agreement with Namdeb Diamond Corp. (Pty) Ltd.

On behalf of the Board


Dr. Larry Ott, Chief Executive Officer

This news release may contain assumptions, estimates, and other forward-looking statements regarding future events. Such forward-looking statements involve inherent risks and uncertainties and are subject to factors, many of which are beyond the Company's control, that may cause actual results or performance to differ materially from those currently anticipated in such statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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