13 May 2008                                                                                                   

 Petra Diamonds Limited ("Petra" or "the Company") Update

 Angola - Petra to assume control of Alto Cuilo and Luangue

 South Africa - diamond prices surpassing expectations and Cullinan acquisition on track

 Petra Diamonds, the international diamond mining group, is pleased to announce important developments with regards to the Company's exploration programme in Angola as well as an update on diamond prices achieved and progress on the acquisition of Cullinan in South Africa.

 Summary

Angola

• BHP Billiton is to transfer its interests in the joint venture exploration projects at Alto Cuilo and Luangue to Petra
• At both projects this will enable Petra to take full control of the exploration data generated to date as well as creating the opportunity to significantly accelerate the  test and drilling programmes
• At Luangue, Petra is pleased to announce that a low level, high resolution aeromagnetic survey has identified 138 targets, and an initial drilling programme is planned to commence within two months

South Africa

• The latest tenders for diamonds from Koffiefontein and the fissure mines have delivered excellent prices. The average sales value for Koffiefontein stones for the four months to end April 2008 was US$484 per carat, an 18.6% increase vs the six months to 31 December 2007, placing Koffiefontein amongst the world's top kimberlite diamond mines by value per carat. The March and April tenders fetched $524 and $526 per carat respectively
• The acquisition of Cullinan is progressing well and completion of the transaction remains on track for July 2008.  Due to forward foreign exchange cover put in place during the recent spell of Rand weakness, Petra's contribution to the acquisition cost of Cullinan has reduced from US$50m to approximately US$40m

 Adonis Poroulis, Chairman of Petra, said:  "We are announcing today a number of positive developments.  Our joint venture with BHP Billiton has been rewarding, but we now have the opportunity to progress exploration at Alto Cuilo and Luangue in a way that is more oriented to Petra's approach to mining.

 Petra is in a great position to deliver on its strategy and our enthusiasm and belief in Alto Cuilo and Luangue is as strong as ever. We see the projects, and this region of Angola particularly, as an important new source of diamonds and we intend to use our proven expertise to further unlock the value of our assets for long term shareholder value.

I am also delighted to report on the continued strength in the diamond market, as evidenced by the high prices we are achieving for our production.  The landmark acquisition of Cullinan also remains on track for completion and we look forward to reporting further progress to the market over the coming months."

Dr Antonio Diogo Mariano, Endiama representative and Chairman of Project Alto Cuilo, said: "The philosophy of the Angolan Partners in Project Alto Cuilo is well aligned with Petra's objectives to focus and accelerate the exploration at Alto Cuilo, to progress to the next phase of exploration and to production as soon as possible. We would like to see our natural resources developed in a responsible manner creating wealth and prosperity in Angola, whilst rewarding our foreign partners for their risk and investment. Angola is serious about attracting investment and we have the definite goal to grow our highly prospective diamond sector."

Conference Call

Please note, Petra Diamonds' management will be discussing today's developments on a conference call at 11:00am (GMT). The numbers required to dial in are listed in the table below:

Alto Cuilo

On 9 May 2008 BHP Billiton advised Petra that it is transferring to Petra its interests in the Alto Cuilo Joint Venture ("Alto Cuilo JV"). Petra and BHP Billiton have agreed that the date of this handover is retrospective, to take effect from 31 March 2008.

As at 31 March 2008, BHP Billiton had earned a 75% interest in the Alto Cuilo JV and BHP Billiton and Petra have now embarked on a negotiation to determine the final terms governing BHP Billiton's handover. The wealth of exploration data acquired over the period since November 2004 (the Alto Cuilo JV commencement date) is now available for Petra's use and technical re-interpretation.

Petra is confident that Alto Cuilo has the potential to host one or more diamond deposits that would add substantial value to Petra's portfolio, and to Petra shareholders, and that such deposits could be of substantial size and value. With effect from 1 April 2008, Petra will operate and fund the development of Alto Cuilo. The work programme will now be fast-tracked by Petra and be highly focused on specific areas of interest, being the near-surface crater rim resedimented volcaniclastic kimberlite ("RVK") deposits where highly encouraging exploration results have been recorded. Petra believes that the crater rims have the potential to contain substantial deposits of economic diamond-bearing material, as is the case at other diamond mines with similar mineralisation, such as Catoca in Angola and Williamson in Tanzania.

An initial work programme budget of US$10 million will be funded from Petra's internal cash resources over the period to end December 2008. The exploration results will then be reviewed and Petra's Board will make a decision with regards to further investment at that time. Should Petra choose to do so, it may invite a partner into PDAC (the company that houses Petra's interest in Alto Cuilo), as upon transfer of BHP Billiton's interest, it will own 100% of the shares in PDAC on an unencumbered basis.

In addition, Petra has recently acquired a 40% shareholding in Moyoweno, the Angolan commercial company which holds a 13% interest in the Alto Cuilo kimberlite project. Upon completion of the transfer of BHP Billiton's interest and as a result of the Moyoweno transaction, Petra's effective stake in the Alto Cuilo kimberlite project will increase from 9.0% to 41.2%, being 36% direct and 5.2% through its interest in Moyoweno. Endiama, the Angolan state diamond body, remains a 51% holder with the other shareholders in Moyoweno holding the balance of 7.8%.

Petra expects to significantly accelerate the pace of exploration at Alto Cuilo and associated news flow going forward.

Luangue

On 9 May 2008 BHP Billiton advised the Company that it is transferring to Petra its interests in the Luangue Joint Venture ("Luangue JV"). Petra and BHP Billiton have agreed that the date of this handover is to take effect from 30 April 2008.

As at 31 March 2008, BHP Billiton had a 25% interest in the Luangue JV and BHP Billiton and Petra have now embarked on a negotiation to determine the final terms governing BHP Billiton's handover.

On completion of BHP Billiton's handover, Petra's effective stake in the Luangue kimberlite project will increase from 29.25% to 39%. With effect from 1 May 2008, Petra will operate and fund the development of Luangue and as a result, the work programme will be fast-tracked by Petra and will focus on specific areas of interest highlighted by the results of the low-level aeromagnetic survey detailed below.

Petra is today announcing the highly encouraging results of the helicopter-borne low level, high resolution "towed bird" aeromagnetic survey at Luangue, where 138 targets have been identified.  The total surface area of the targets is in excess of 8,000 hectares*, with certain individual targets up to 233 hectares* in surface area.  Five of these targets have already been drill confirmed as kimberlite and Petra now plans to start an initial drilling campaign at Luangue within two months.

As at Alto Cuilo, the work programme at Luangue will focus on proving up the potential of enriched near-surface RVK deposits, which have been shown by exploration at Alto Cuilo to be the areas most likely to host economic mineralisation. Preliminary modeling carried out by Xcalibur Geophysics on the high resolution magnetic data for five of the high priority targets indicates cover of less than 50 metres at the shallowest point. This is supported by drilling at known kimberlites on Luangue, which have been intersected within 30 metres of surface.

Kimberlite indicator mineral ("KIM") data collated at Alto Cuilo will be taken into account on the Luangue drilling programme, in order to speed up the prioritisation of kimberlites for mini bulk sample ("MBS") testing which will commence later this year. Three narrow diameter drill rigs are currently en route to Luangue and drill confirmation of kimberlites is expected to start within the next two months.  Alluvial exploration work to date has recovered nearly 3,000 carats from the immediate vicinity of five of the targets, further supporting the potential of the area.  As detailed information on diamond content emerges from Petra's exploration programme at Alto Cuilo, it will greatly assist in the selection and prioritisation of targets at Luangue. This is expected to fast-track exploration developments at Luangue and is also expected to reduce costs in many areas.

An initial 12 month work programme budget of US$12 million will be funded from Petra's internal cash resources over the period to end April 2009. The exploration results will then be reviewed and as at Alto Cuilo, Petra's Board will make a decision with regards to further investment at that time, following a significantly accelerated pace of exploration and associated news flow. Should Petra choose to do so, it may invite a partner into Frannor (the company that houses Petra's interest in Luangue), as upon the transfer of BHP Billiton's interest, it will own 100% of the shares in Frannor on an unencumbered basis.

Further information from the aeromagnetic survey is set out later in this announcement.

Results from latest tender - update on diamond pricing

Prices achieved from Koffiefontein continue to surpass expectations. The average value per carat realised from the mine for the four months to end April 2008 has risen by 18.6% to US$484, compared to the value for the six months to end December 2007 of US$408 per carat. The March and April tenders fetched $524 and $526 per carat respectively.

This increase is due in part to a strong market for diamonds, and particularly for the higher value goods which form a substantial part of Koffiefontein's production.  However, it also reflects the operational changes made under Petra's management control, which continue to improve the mine's economic performance.

US$484 per carat is exceptional for a kimberlite mine and places the value of Koffiefontein's production amongst the world's top kimberlite mines. Crucially, grade has not been sacrificed to achieve these prices, and the last reported grade of 8.2 carats per hundred tonnes continues to be met. The average price achieved for Koffiefontein for the period since July 2007 to date is $451 per carat.

The average value per carat at Petra's three fissure mines is running at US$231 per carat for the four months to the end of April 2008 (compared to the value for the six months to the end of December 2007 of US$182 per carat). A significant portion of this increase is due to a change in mix over the last ten months, but even without this change, Petra is confident that the average of US$182 to December 2007 would have increased by at least 10%. The average price achieved for the fissures for the period since July 2007 to date is $200 per carat.

Cullinan Acquisition

On 22 November 2007 Petra, as a member of the Petra Diamonds Cullinan Consortium ("PDCC"), entered into an agreement with De Beers Consolidated Mines Limited ("De Beers") to acquire Cullinan. As stated within Petra's announcement of 22 November 2007, it was expected that the conditions precedent to complete the acquisition would be met between May and July 2008.

In December 2007, the South African Department of Minerals and Energy converted the old order mining right in respect of Cullinan into a new order mining right, and in February 2008 the South African Competition Commission gave its approval of the acquisition. Completion of the acquisition remains conditional upon the following conditions:

(i)            Ministerial consent to the cession to PDCC of the new order mining right in respect of Cullinan;

(ii)           the DME consenting to the cession, transfer and delegation of the rehabilitation obligations and liabilities in respect of Cullinan from De Beers to PDCC; and

(iii)          regulatory and other approvals as may be required.

The acquisition remains on track and Petra's expectations with regards to completion of the acquisition have not changed, with completion still expected to take place by the end of July 2008.

As announced on 22 November 2007, PDCC is to acquire Cullinan from De Beers for a total consideration of R1 billion (US$149 million). This consideration is payable in cash when the conditions precedent set out above have been met, with Petra's share of the consideration expected in November 2007 to be approximately US$50 million. Petra is pleased to announce that management put forward exchange cover in place during the recent spell of rand weakness, and Petra's contribution to the rand acquisition cost of Cullinan has corresponding reduced by 20% from approximately US$50 million to approximately US$40 million.

Background to and revised exploration approach at Alto Cuilo

To date, the Alto Cuilo kimberlite exploration programme has focused on delineating economically viable large-tonnage kimberlite vents containing diatreme-facies volcaniclastic or tuffisitic kimberlite ("VK" or "TK").  The diamond bearing potential of crater-facies RVK has not been the area of focus, and specifically not the RVK typically encountered along crater rims.   Catoca successfully mines this crater facies RVK close to surface and it is Petra's belief that by refocusing the exploration campaign on the crater facies RVK, the potential for finding a world-class kimberlite deposit at Alto Cuilo remains good.

Petra has now taken over control of the Alto Cuilo exploration programme and will focus on proving up the potential of enriched near-surface RVK deposits. The volcaniclastic and sedimentary processes that redistribute kimberlitic material during and directly after volcanic eruptions often cause significant improvement in both grade (as at the Catoca mine in Angola and the Williamson mine in Tanzania) and stone size within the RVK layers, especially where concentrated RVK lies close to the crater rim. This is particularly important in Angola due to lack of erosion of the kimberlites, meaning that the RVK proximal facies (crater rim) is still largely in place. The 77 kimberlites discovered to date at Alto Cuilo were previously ranked on the basis of heavy mineral analysis ("HMA") and micro diamond analysis ("MIDA"). Petra has now re-ranked these kimberlites based on their potential for also hosting diamond bearing RVK close to surface, and Petra's MBS programme will focus predominantly on close to surface crater-rim RVK material.

Petrographic investigations of large amounts of core intersections (carried out by Mineral Services, Canada) has indicated that the RVK material shows a better diamond carrying capacity than the diatreme-facies kimberlite, based on the concentration disposition and size of mantle minerals observed in the crater-rim RVK. This RVK material also has the benefit of being closer to surface and therefore more accessible and cheaper to mine. The Catoca diamond mine, and other Angolan kimberlites, exhibit economic diamond grades at the rim and indeed all of Catoca's production is understood to be from such RVK material.

In September 2004, Petra announced that it had undertaken limited testing and processed a 40 tonne sample from outcropping crater rim RVK material. The sample grade was 47 carats per hundred tonnes, with an average stone size of 0.81 carats; 23 macro diamonds greater than 1mm were recovered, including a white gem quality octahedron stone of 9.61 carats, giving a total weight of 18.7 carats. In July 2005, Petra reported that these stones had been valued at an average of US$295 per carat. This result illustrates the potential of the RVK material from one of the targets identified by Petra for further exploration.

From the entire Alto Cuilo area of 2,670km�, Petra's has identified an area of 276km� (23km by 12km) for the revised work programme. This smaller area hosts 51 kimberlites of which eight (based on Petra's re-ranking following a review of the exploration data) will be targeted for the accelerated work programme. These kimberlites form a cluster and one or more of these targets could be mined individually or together utilising a central process plant. Petra's view is that there is considerable potential for economically viable RVK material relatively close to surface, both on the kimberlites tested by MBS drilling to date, as well as on other kimberlites with good diamond potential based on HMA results. All of these kimberlites (where accessible) have, within these RVK zones, supported substantial levels of garimpeiro (artisanal) mining activity in the past.

Mining of the Catoca pipe has shown that RVK can sustain a kimberlite mine and produce revenue that allows the mine to be extended to depths in excess of 100 metres.  Catoca, which recorded revenues of US$451.4 million for 2007, is approximately 60 hectares in surface area. The eight kimberlites targeted by Petra range from an estimated 30 to 180 hectares in surface area and should the RVK of any of these targets be shown to hold economic grade, it is entirely feasible that a substantial mine could be hosted at Alto Cuilo. Petra's work programme over the next eight months will investigate the considerable amount of RVK that has been indicated by narrow diameter drilling at the rims of these eight targeted kimberlites, and a significantly accelerated pace of development and associated news flow is expected. Should potentially economic RVK be discovered in one or more of the targeted kimberlites, a more detailed work programme will follow to quantify grades and tonnages.

MBS sampling of the four highest priority targets will start in June, with 6 weeks of MBS drilling planned for each target. It is envisaged that MBS sample results from the crater rim programme will be reported every two months. In tandem with the MBS programme, a narrow diameter drill programme will be initiated to identify further crater rim MBS targets on the remaining four kimberlites identified for the work programme.

It should also be noted that the MBS tests from RVK to date (approximately five tonnes per sample for each 30 metres of drilling) has not produced sufficient carats to accurately quantify grade, stone size and value. Diamond distribution curves for all the MBS tests to date have been heavily skewed towards smaller diamonds within the diamond population, an effect that could reduce the reported sample grade (and value) by a substantial percentage. This skew in the diamond population could be explained by either:

• ineffective recovery of larger diamonds within the sampling system; and/or
• sample sizes insufficient to ensure that the full diamond distribution is represented by each sample; and/or
• the crater rims, where coarser diamond distributions would be expected, not being sampled.

Where possible, Petra will take a bulk sample of outcropping and near surface RVK to accurately assess the diamond population present, in conjunction with MBS and narrow diameter core drilling to delineate zones of near-surface RVK.

Petra's resulting interests in Alto Cuilo

In November 2004, Petra and BHP Billiton entered into the Alto Cuilo JV to explore for and develop potential diamond mines at Alto Cuilo. Under the terms of the Alto Cuilo JV, BHP Billiton funded and operated the Alto Cuilo work programme and acquired a shareholding of 75% in Petra Diamonds Alto Cuilo ("PDAC") (the company through which Petra's interest in Alto Cuilo is held). 

PDAC has a 36% interest in the Alto Cuilo kimberlite exploration contract, with the balance being held as to 51% Endiama (the Angolan state diamond body) and 13% Moyoweno (an Angolan private commercial company).

With regards to Petra's total current interest in Alto Cuilo, in 2007 Petra commenced negotiations with Moyoweno to increase Petra's effective interest in Alto Cuilo. These negotiations have now been concluded, and Petra has acquired a 40% shareholding in Moyoweno, giving Petra a further 5.2% interest in Alto Cuilo and taking Petra's total interests (upon the transfer BHP Billiton's interest) in the Alto Cuilo kimberlite contract to 41.2%

Petra's resulting interest in Luangue

Frannor (the company that houses Petra's interest in Luangue) has a 39% interest in the Luangue kimberlite exploration contract, with the balance being held as to 51% Endiama (the Angolan state diamond body) and 10% Bapsil (an Angolan private commercial company). On completion of BHP Billiton's transfer, Petra's effective stake in the Luangue kimberlite project will therefore increase to 39%.

Luangue aeromagnetic survey

A helicopter-borne, gradient array, low-level, high-resolution aeromagnetic survey was carried out over the Luangue project area (28,000 line kilometres at 100 metres line spacing, covering approximately 90% of the total Luangue area). To further improve the resolution, a "towed bird" configuration was also used as this serves to minimise magnetic interference. This survey approach utilises highly sensitive technology and is capable of achieving very high quality and reliable results. This is next generation exploration technology and is even more sensitive than that previously applied with success at Alto Cuilo.

The analysis of the resulting data from the survey has now been completed and a total of 138 targets, with a total surface area in excess of 8,000 hectares*, have been identified following the data interpretation undertaken by Xcalibur Geophysics, the independent operator that also carried out the aeromagnetic survey. Many of the targets have characteristics comparable to those identified from the aeromagnetic survey carried out at Alto Cuilo in 2005, where they were subsequently confirmed by drilling to be kimberlites.

A number of the targets are in the north of the Luangue project area, including targets L119 and L120 at 50 hectares* and 215 hectares* respectively. These two targets lie in the north east corner of the Luangue concession, with L120 being just 35 kilometres to the west of the major Catoca diamond mine, which reported a revenue of US$451.4 million for 2007.

The majority of the targets are in the southern part of the Luangue project area and appear to be contiguous to the Alto Cuilo kimberlite field which has already been proven to be diamondiferous. This southern area at Luangue includes 22 anomalies, each with a footprint of over 90 hectares* in surface area, including priority anomalies such as L1 at 215 hectares*, L60 at 156 hectares* and L67 at 233 hectares*. L67 has already been drill confirmed as kimberlite.

Petra has prioritised 49 targets, of which 26 total 1,800 hectares*, for a narrow diameter drilling programme to begin by the end of July 2008. Drill holes will be positioned to intersect RVK close to surface at the estimated crater rim locality, which has been shown by exploration at Alto Cuilo to be the area most likely to host economic mineralisation, due to diamond concentration and upgrade in stone size. Preliminary modeling carried out by Xcalibur Geophysics on the high resolution magnetic data for five of the high priority targets indicates cover of less than 50 metres at the shallowest point. This is supported by drilling at known kimberlites on Luangue, which have been intersected within 30 metres of surface.

Petra's experience together with the wealth of data at Alto Cuilo, gives the Company a significant advantage in prioritising the targets at Luangue. In order to speed up the prioritisation of kimberlites for the MBS testing which will commence later this year, the results from analysis of KIM data collated at Alto Cuilo will be taken into account on the Luangue drilling programme. Three narrow diameter drill rigs are currently en route to Luangue and drill confirmation of kimberlites is expected to start within the next two months.

 *   geophysically estimated surface area

 ~Ends~

Notes

1. The information in this update that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Jim Davidson, Pr. Sci Nat (reg No 400031/06), who is a Member of the Geological Society of South Africa, a 'Recognised Overseas Professional Organisation'. Jim Davidson is the Qualified Person for the purposes of the AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006. Jim Davidson is a full-time employee of the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify. Jim Davidson has given his written consent to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

2. It should be noted that the potential quantity in this report is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

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 Notes to Editors:

 About Petra Diamonds

Petra Diamonds is an international diamond mining group with a balanced portfolio combining major producing mines, world class exploration assets and a cutting and polishing business.

 With operations in South Africa, Angola, Botswana and Sierra Leone, Petra's objective is to continue to grow production, developing its stature as a leading diamond producer in all of the countries in which it operates. 

 In South Africa, Petra has four producing mines and recently reached agreements to acquire two further mines from De Beers (Cullinan and Kimberley Underground).  The group is on track to increase its annual production from 180,000 carats in the year to June 2007 to over 400,000 carats in the year to June 2009 and is targeting annual production of over 1 million carats thereafter.

Complementing the Group's production is an exploration and development portfolio spread across some of the world's most prospective diamond fields. In Angola, Petra is developing the world class Alto Cuilo and neighbouring Luangue projects. In Botswana, Petra has established the largest diamond exploration landholding in the country, where it believes that modern exploration techniques will hold the key to the discovery of new, major kimberlites. In Sierra Leone, Petra is developing a fissure operation with its JV partner Stellar Diamonds and test work to date indicates the potential for economic operations.

The Petra group now employs some 3,000 people and over the last 10 years the Company has developed a range of social initiatives which continue to make a meaningful impact upon the lives of employees and surrounding communities.  Petra's focus remains upon sustainable development, via educational programmes and skills transfer, to ensure a broad based approach with a lasting legacy, and all operations are carried out with the highest regard for the environment according to best practice.

Petra will only commit to working in countries which are members of the Kimberley Process and shareholders can remain assured that Petra's diamonds will only ever be 100% conflict free.

For further information, please visit www.petradiamonds.com