Kopane Diamond Developments PLC

August 17, 2009 07:36 ET


                                               PRESS RELEASE

                                      KOPANE DIAMOND DEVELOPMENTS Plc
                                        ("Kopane" or the "Company")
                                         POWER LINE FUNDING UPDATE
17 August 2009

Kopane  Diamond Developments Plc today announces that a Memorandum of Understanding ("MOU") has been signed
between  the  Company's  subsidiary,  Liqhobong Mining Development Company  ("LMDC"),  Lesotho  Electricity
Company  ("LEC"),  Standard  Lesotho Bank Limited ("SLB") and the Government  of  the  Kingdom  of  Lesotho
("GOL"),  in  respect of funding of the construction of an electrical power line to the Company's  mine  at
Liqhobong in Lesotho.

The  MOU contemplates funds being lent by SLB 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 the GOL
will  contribute  funds  towards  the cost of the project and the GOL has agreed  to  provide  a  sovereign
guarantee to SLB in respect of the loan funding. LMDC will service the loan and its repayment on  terms  to
be agreed. The cost of grid electricity represents a significant saving over diesel generated power.

The  power line project to connect Liqhobong to the electricity grid system is the first phase of a  larger
electrification  plan to be undertaken in the region by LEC which will provide electricity  to  communities
along the line route.

The  engineering  specifications of the power line, together with environmental impact assessment  studies,
have been completed in readiness for the start of construction in the second half of 2009, once funding  is
in  place.  It is expected that this will enable grid electricity to be connected to the mine site  by  the
first half of 2011. The availability of grid power will also mean that it would become more practicable  to
undertake  a  significant expansion of the Company's Satellite Plant from its current capacity  of  425,000
tonnes per annum.

The  Company  suspended production from its Satellite Plant operations in December  2008  as  a  result  of
sharply  falling  prices available for rough diamonds due to the present world economic situation.  Between
October 2008 and the end of the first quarter of calendar 2009, rough diamond prices fell by some 30 - 50%;
since  then market indications are that prices have improved and are gradually recovering but not, as  yet,
to  previously  prevailing levels. However, the Company remains confident that the  medium  and  long  term
outlook for rough diamond prices is likely to be robust in the face of projected supply shortages.

Frank  Scolaro, Chairman of the Company, commented today: "The signing of the MOU is an important  step  in
the  process of funding and constructing the power line to provide electrical power to Liqhobong, which  is
necessary  to enable the Company to put in place its plans for new plant which will allow the  recovery  of
over  one  million carats per annum from the Main Pipe at a much lower cost. We are very pleased  with  the
support  given by all parties to this project, which is a tribute to the future of mining at Liqhobong  and
which represents a significant benefit to the people of Lesotho and the shareholders of Kopane."

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 LMDC which is 75% owned by Kopane and 25% by the 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  produced  over 350,000 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 Diamonds

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
Frank Scolaro, Chairman                              Laurence Read/Beth Harris
James Cable, Finance Director                        +44 (0) 207 653 9850
+44 (0) 20 7963 9590

Matthew Robinson/Ed Frisby
+44 (0) 20 7600 1658

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

Contact Information

  • Kopane Diamond Developments PLC