diamond valuation for martin’s drift confirms us$5

25 October 2005

DIAMOND VALUATION FOR MARTIN’S DRIFT CONFIRMS US$5-12M/YR CASHFLOW POTENTIAL

DiamonEx Limited today announced that a valuation of diamonds from its Martin’s Drift project in Botswana had confirmed the potential for the project to generate an annual cashflow # of between US$5 million and US$12 million.

Independent valuers WWW International Diamond Consultants Ltd## (WWW) made the valuation of a parcel of diamonds from Martin’s Drift. Using this valuation, DiamonEx has estimated the weighted average price of diamonds for its Martin’s Drift project to be US$53 per carat using a bottom cut-off of 1mm, increasing to US$59 per carat using a cut-off of 1.5mm. This weighed average is based on the contribution by sample weight from each pipe to the overall bulk sample.

DiamonEx Managing Director Mr Dan O’Neill said today: “Confirmation of diamond values is a vital step in the feasibility study into the development of the Martin’s Drift project. Feasibility work is continuing and we are on track for commencement of production in late 2006 or early 2007.”

“Using the average prices determined by WWW, the initial indication is that a 1Mt/yr to 2Mt/yr project costing between US$12 million and US$14 million to build would provide an annual cashflow of between US$5 million and US$12 million. These cashflow numbers are indicative only at this stage and will be firmed up as the detailed feasibility study is competed.”

“This assumes a 1mm lower size cut-off for the diamonds. Significant operating cost savings may be achieved by increasing the cut-off to 1.5mm, reducing the amount of crushing and sorting required. WWW’s report indicates that increasing the bottom cut-off size to 1.5mm from 1mm reduces the total value of diamonds recovered by only 4%.”

“The valuation data will now be used to finalise the resource estimate which is expected to be completed within the next few weeks.”

“We are not anticipating any significant change from the previous estimate of 13.3 million tonnes at an average grade of 22.82 carats per hundred tonnes,” Mr O’Neill said. DiamonEx proposes bringing Martin’s Drift into production in late 2006 or early 2007 subject to the feasibility study.

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In their report to DiamonEx, WWW assuming a bottom cut-off of 1.00mm square mesh,
recommended using a modelled average price for feasibility exercises of US$57 per carat for the K3, K5 and K6 pipes, with high and low values of US$63 per carat and US$48 per carat respectively. The recommended average price for the K2 pipe was US$45 per carat, with high and low values of US$50 per carat and US$37 per carat respectively.

WWW also determined that the average prices increased for K3, 5 and 6 to US$63 per carat and for K2 to US$50 per carat, using a 1.5mm lower size cut-off. It is estimated that pipe K3, represents approximately 50% of the total resource.

Diamond values are based on a parcel of over 850 carats from four of the five diamondiferous pipes which comprise the Martin’s Drift project. A parcel of diamonds from the remaining pipe, K4, was of insufficient size to undertake a meaningful valuation. Further parcels of diamonds from K2 and K4 are in transit to WWW.

Commenting in its report on the DiamonEx diamonds WWW stated:
‘There was nothing to suggest from the samples that any future production from the Martin’s Drift kimberlites might prove difficult to polish, nor that if properly presented and assorted that they would not sell well in the market place.’

WWW’s assessment of the diamond market was that ‘The basic fundamentals of the diamond markets at this moment in time look positive.’

The Martin’s Drift project is located within an area of Botswana which produces 35% of the
world’s diamonds by value. DiamonEx is planning further exploration work in its 700km2
prospecting licences surrounding Martin’s Drift project, aimed at increasing the size of the
resource.

# cashflow = revenue from sales – operating costs, before tax and interest
## WWW International Diamond Consultants Ltd is a UK registered company formed in January 1996 providing an independent valuation and advisory service principally to diamond mining and exploration companies, governments of diamond producing countries and private diamond companies.

Diamonex Limited