Quarterly Report for the period ended 31 December 2008

 
TIDMDON 
 
DiamonEx Limited 
 
AIM Release 
30 January 2008 
 
QUARTERLY REPORT 
FOR THE QUARTER ENDING 31 DECEMBER 2008 
 
- 159,000 tonnes of ore treated 
- 42,993 carats of diamonds produced 
- World wide diamond market remains depressed 
- Plant still not operating at full capacity 
- Lerala plant put on care and maintenance 
 
 
THE LERALA DIAMOND MINE (Diamonex 100%) 
 
Mining Operations: 
The Lerala Mine commenced production in October 2008. Following is a 
summary of production information. 
Mining Operations                     December 2008 
Quarter                      Year to Date 
Ore Tonnes Mined 
95,208                                                291,089 
Ore Tonnes Treated 
159,290                                              162,072 
Diamonds Produced (carats) 
42,993                                                48,341 
Average Grade 
27.0                                                    N/A 
Diamonds Sold (carats) 
10,612                                                10,612 
Revenue (A$) 
284,591                                              284,591 
 
The Lerala diamond plant has not achieved full operating capacity, 
although many of the small engineering defects that had become 
evident during commissioning have been rectified. During the quarter 
159,290 tonnes of ore from the pit on pipe K3 were processed through 
the plant to produce 42,993 carats of diamonds. 
During the quarter worldwide diamond prices remained severely 
depressed as the global monetary crisis continued to impact severely 
on the demand for diamonds. This was reflected in the Company's first 
diamond sale at the end of October where an average price of US$20 
per carat was received for the 10,612 carats sold. Your Directors 
believe this price is an anomaly which is significantly below the 
longer term value of Lerala diamonds. The Directors are of the 
opinion that in the medium to long term, the supply deficit in world 
diamond production that currently exists and is expected to continue 
to increase over the next decade, will ensure that the market for 
rough and polished diamonds is strong. Short term however, with the 
global credit crisis, prices will remain uncertain. 
 
In the light of these market conditions, the Company looked at 
various sources of interim funding to make up for the poor price 
received from this first sale.  As released to the market by an 
announcement dated 26 November 2008, the government of Botswana has 
given a guarantee on a financing facility provided to Diamonex by the 
Stanbic Bank Botswana. The financing facility was for an initial ten 
million Pula, and with the option to extend with the consent of the 
government of Botswana depending on how discussions and negotiations 
proceed with Indian or other buyers.   To date the government has 
declined to extend this facility, however discussions with the 
government of Botswana are continuing. 
 
Diamonex has also entered into discussions with numerous diamond 
buyers from India, China, and Israel with a view to entering into a 
long term arrangement to sell its diamonds at a set price under a 
medium term contract. 
 
Diamonex Botswana Limited 
 
The Board has investigated various alternatives to address the 
operational funding requirements of Diamonex Botswana Limited. 
 
In January 2009 it was evident that prices for rough diamonds were 
unlikely to increase in the short term and a decision was made to 
apply for Judicial Management for Diamonex Botswana Limited. The 
hearing took place on Friday, 23 January 2009 (Botswana time). An 
order for judicial management was made and Diamonex Botswana Limited 
was granted a period of immunity from claims from its creditors. 
 
Suspension of Trading 
 
The making of this Judicial Management Order may place DiamonEx in 
breach of covenants with a number of its borrowers and DiamonEx has 
commenced negotiations with these lenders, which are ongoing and the 
outcome of which are uncertain. Consequently, application was made to 
the Australian Securities Exchange, the Botswana Stock Exchange and 
the Alternative Investment Market of the London Stock Exchange to 
suspend trading in the Company's shares until 2 March 2009. 
 
Strategies 
 
The strategies that are being considered regarding DiamonEx 
operations include a reduction in operating costs for the Lerala Mine 
by the halting of further mine expansion and the processing of the 
stockpiled ore (approximately 363,000 tonnes). 
 
DiamonEx is currently in negotiations with its key lenders regarding 
the nature of any arrangement between it and these lenders which will 
ensure that DiamonEx is able to continue in operation.  The Directors 
are also in discussions with other parties in order to secure ongoing 
financing for the Group. 
 
EVALUATION 
 
Sloan Mineral Rights, Northern Colorado, USA (Diamonex 100%) 
 
No work was carried out during the quarter. 
 
EXPLORATION 
 
No exploration activities were carried out during the quarter. 
 
The Company has suspended all activity on its portfolio of 
exploration properties. 
 
OUTLOOK FOR THE NEXT QUARTER 
 
The focus for the current quarter will be on developing a funding 
strategy that will provide a stable financial basis for the Company 
that will enable the Group to see out the current difficult diamond 
marketing conditions and establish a platform from which the Company 
can re-establish profitable mining operations at its Lerala Diamond 
Mine. 
 
For and on behalf of the Board 
Paul Crawford 
Company Secretary 
 
 
For further information contact: 
 
Dan O'Neill 
Managing Director 
Tel: [phone] 
Mob: [phone] 
Email: [e-mail] 
 
Greg King 
Chairman 
Tel: [phone] 
Mob: [phone] 
Email: [e-mail] 
 
Will Souter or Rob Adamson 
RFC Corporate Finance Ltd (Nomad) 
Tel: [phone] 
        [phone] 
Email: [e-mail] 
            [e-mail] 
 
Fox-Davies Capital Ltd (AIM Broker) 
Tel: [phone] 
 
Jos Simson or Leesa Peters 
Conduit PR - Investor Relations 
Tel: [phone] 
        [phone] 
Email: [e-mail] 
 
About DiamonEx: 
 
DiamonEx is an emerging diamond producer having developed a 330,000 
carat per year diamond mine at Lerala, in eastern Botswana.  The mine 
is 100% owned and is located in an area that produces up to 30% of 
the worlds diamonds by value.  The company also owns 15,000 sq km of 
mineral rights in Botswana which it is actively exploring for 
diamonds, as well as a 9.3 hectare diamondiferous kimberlitic pipe in 
northern Colorado, USA, which it is currently evaluating for grade 
and value.  DiamonEx is listed on the Australian Stock Exchange 
(ASX), the Alternative Investment Market in London (AIM), and the 
Botswana Stock Exchange (BSE). 
 
 
The information in this report that relates to Exploration Results 
and Mineral Resources is based on information compiled by Mr Dan 
O'Neill who is a member of the Australian Institute of Geoscientists 
and a full time employee of DiamonEx Limited.  Mr O'Neill has 
sufficient experience which is relevant to the style of 
mineralisation and type of deposit under consideration and to the 
activity which they are undertaking to qualify as Competent Persons 
as defined in the 2004 Edition of the 'Australasian Code for 
Reporting of Exploration Results, Mineral Resources and Ore 
Reserves.'  Mr O'Neill consents to the inclusion in the report of the 
matters based on his information in the form and context in which it 
appears. 
 
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