Operational Update

    RNS Number : 1342Z
  River Diamonds PLC
  15 July 2008
   

    
    AIM: RVD


    River Diamonds Plc

    ("River Diamonds" or "the Company")

    Operational Update from the Vatukoula Gold Mine in Fiji


    River Diamonds (AIM: RVD) announces an operational update from its 100% owned Vatukoula Gold Mine in Fiji ("the Mine"). 

    HIGHLIGHTS

    *     Completion of 100% acquisition of the Mine in April 2008
    *     Gold production commenced in April 2008 with the re-commissioning of the Vatukoula Treatment Plant
    *     First Gold pour in May 2008
    *     36,920 tonnes of ore has been produced to 30 June 2008, with an average grade of 10.86 grams per tonne of gold (12,890 ounces of
gold)
    *     Mine production from the 1st July to 14th July totalled 5,843 tonnes, with an average grade of 11.11 grams per tonne of gold
(2,088 ounces of gold)
    *     Gold is now being poured weekly. Total gold sold to date amounts to 4,954.1 ounces, realising an average gold price of US$915 per
ounce
    *     Gold recoveries through the Vatukoula Treatment Plant to 30 June 2008 have averaged 86.27%. 
    *     Labour force increased to over 600 employees
    *     Management on site strengthened with the appointment of a new General Manager, Mill Superintendent and Mechanical and Electrical
Superintendents
    *     Operations continue to build up in terms of capacity
    Operations Update:
    Since the completion of the 100% acquisition of the Vatukoula Gold Mine in April 2008, mining and milling operations have progressively
been improving as all sections of the Mine become operational.
    The Company has anticipated 26,000 ounces of gold production to 30 June 2008 as stated in its admission document dated 1 April 2008.
However, the biggest obstacle to achieving this target and full operational capacity since commencement of milling operations has been the
restrictions to mine generated power, due primarily to the staged re-commissioning of the Mine's power station and the overhaul of the
Mine's underground diesel earthmoving fleet. 
    The power station is now almost fully operational with the re-commissioning last week of the largest generators ESL1 (with an online
capacity of some 2.4 Megawatts). An additional 2 Megawatts of contracted generator capacity is due to be installed and on-line prior to the
end July 2008. These new generators will provide more than sufficient power to run all sections of the operations on a 24/7 basis with
sufficient built in standby capacity.
    
    Underground Operations:
    The Smith Shaft, Philip Shaft, and Decline are now fully operational. Due to power restrictions associated with the power station
refurbishment, as outlined above, underground mining has been limited to only one of three shifts per day. The recent commissioning of ESL1
has allowed management to move operations to a two-shift basis thereby doubling underground working hours. These plans are currently being
implemented.
    The implementation of the two shift mining operations over the next month is designed to increase production to the Treatment Plant's
capacity of 1,450 tonnes of ore per day. This should enable the Mine to operate at full production. 
    
    Milling Operations:
    The Vatukoula Treatment Plant is now operating satisfactorily with all facets operational. The gold recoveries to date of 86.27% are in
line with historic gold recoveries at the Mine. 
    
    Labour:
    Mr Bert Leathley, ex Ashanti Goldfields, has been appointed General Manager of the Vatukoula Operations and has been joined by
Superintendents of Metallurgy, Mechanical and Electrical.
    Local employee numbers have now increased to 614. This number will increase to closer to 800 employees as full production is reached
over the coming months.
    Corporate - Change of Name:
    The Fiji operating company has changed its name to Vatukoula Gold Mines Limited and as such it is intended to change the name of River
Diamonds Plc to Vatukoula Gold Mines Plc. This will be put to shareholders shortly at the Annual General Meeting currently scheduled for
August 2008.
    Hedging:
    All production from the Vatukoula Mine is completely un-hedged and the Company has no bank debt.
    Future Reporting:
    It is the intention of the Board to now report mine production within 30 days from the end of each Quarter. 
    

    Collin Orr-Ewing, River Diamond's Chairman, commented:
    "We are very pleased with the progress to date of the re-commissioning of this premier gold mine. Most of the obstacles we faced have
been or are now being resolved.  We look forward to continuous gold operations from the mine as we move forward towards full production"
    A lot has been achieved in the short time, since the Company took over operation of the mine. With gold pours now occurring weekly and
the average grades recovered steadily improving, we believe we are now in an excellent position to reach production of 110,000 ounces by the
middle of 2009" 
    

    Qualified Person 
    Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of
Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School. Kiran is the Finance
Director of River Diamonds. He is a fellow of the Geological Society.  
    

    Enquiries: 

 River Diamonds plc                       Hichens, Harrison &
                                          Co plc
 David Lenigas         + 44 20 7016 5100  Dave Paxton           + 44 20 7382 7785
 Colin Orr Ewing       + 44 20 7352 4117

 W.H. Ireland Limited                     Parkgreen
                                          Communications
 David Porter          + 44 20 7220 1666  Louise Goodeve        + 44 20 7851 7480
 James Joyce                              Justine Howarth




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