DiamonEx Limited 1st Quarter Results

AIM Release DiamonEx Limited Quarterly Activities Report For The Quarter Ended 30 September 2007 * Production at Lerala diamond mine on schedule to commence early 2008 * DiamonEx listed on AIM Construction at the Lerala diamond mine in eastern Botswana advanced towards proposed production in early 2008. Lerala, 100% owned by DiamonEx Limited (DiamonEx, the Company), has an established 3.7 million carat diamond resource and is scheduled to produce an average of 330,000 carats per year for 10 years. On 29 October 2007, DiamonEx was listed on the Alternative Investment Market (AIM) in London. Lerala Diamond Mine (DiamonEx 100%) Construction of the project continued during the quarter and is entering the final stages. The foundations of the processing plant and other civil works are 90% completed. All but 2% of the structural steel has been fabricated, and the structural and mechanical erection on site is more than 35% completed. Design work still outstanding is limited to certain pumps, pipe supports and conveyor trestles. Close attention is now being given to the manufacture and installation of conveyors and piping in order to maintain the completion and production schedules. The electrical generators are due to be installed by year's end. Work on the water bores, pumps, pipes and holding dam proceeded during the quarter; water supply should commence by year's end. Strata Mining, the experienced mining company engaged as the Lerala mining contractor, has been involved in the water supply and other infrastructure. Mining is due to commence in the current quarter, with first ore to provide a stockpile for commissioning in the lead-up to production. Initial production is scheduled to commence in early calendar 2008. Full production will be achieved with the use of special equipment, the High Pressure Grinding Roller Crusher (HPGR), designed to increase diamond recoveries. Delivery of the HPGR has been fast tracked so that it can be installed and commissioned earlier than anticipated. Currently the HPGR is expected to be delivered during February with installation to be completed by mid March. Commissioning of the HPGR is expected toward the end of March. With the earlier arrival of the HPGR the plant commissioning process is now under detailed review as instead of the staged commissioning build up awaiting the arrival of the HPGR(Tertiary crushing circuit) as currently planned it maybe more efficient to complete full commissioning during March. However this will not affect full diamond production being attained during May 2008. Exploration Martin's Drift Prospecting Licence (Diamonex 100%) The company is actively exploring four Prospecting Licences covering 350sq km surrounding the Lerala Mining Licence. Four areas of positive grain recoveries from previous sampling have been identified and sampled (namely Area 2, Area 3, Area 5 and Area 6). A total of 421 samples were collected and concentrated. All concentrate samples from Areas 2, 3 and 5 were sorted or examined for kimberlitic grains. Only one kimberlitic garnet from Area 5 was recovered. From Area 6, 104 samples out of a total of 176 have been sorted to date and no kimberlitic grains recovered. Sample sorting in this area has been suspended until strip sampling sorting is completed. Strip sampling was also initiated in an area south of K002, where previous 50m follow-up sampling by De Beers returned some kimberlitic garnets. Twelve strip lines, at 100m apart and a sampling interval of 10m along strips, were completed. A total of 4,150 strip samples were collected .Sorting work is underway at the Gaborone sorting laboratory. Trenching has already commenced in areas of high grain counts. Spectral survey anomalies that have been followed up to date have not shown kimberlitic characteristics. Tuli Project ( Diamonex 100%) Sampling work is yet to commence over the airborne spectral targets defined earlier in the year. Funding Final funding arrangements to take the Lerala project into production were announced in July 2007 and summarised in the previous quarterly report on 31 July 2007. As part of the arrangements, on 20 August 2007, a meeting of DiamonEx shareholders approved a placement of approximately A$7.1 million to international investors through London-based broker Fox-Davies Capital Limited. Major global resource investment house J P Morgan Asset Management became the largest shareholder in DiamonEx when it acquired 13 million shares, representing 9.9% of the company's issued capital, for an investment of A$4 million, as part of the placement. Corporate On 29 October 2007, DiamonEx was listed on the Alternative Investment Market (AIM) in London. The listing is intended to broaden DiamonEx's shareholder base, offering investors in the UK and European markets easier access to the Company's securities. The Company has appointed Australian-based RFC Corporate Finance Ltd as its Nominated Adviser and Fox-Davies Capital Limited as its broker in relation to the AIM listing. DiamonEx's ordinary shares will continue to be listed on the Australian Stock Exchange (ASX) and the Botswana Stock Exchange (BSE). Outlook for the December 2007 quarter Construction of the Lerala diamond mining project will continue towards completion, with mining due to commence during the quarter ahead of first production in early 2008. Enquiries: Dan O'Neill (Managing Director) Greg King (Chairman) +61 7 37208944 (Office) +61 7 37208944 (Office) +61 7 37208988 (Fax) +61 7 37208988 (Fax) +61 407596942 (Mobile) +61 411473730 (Mobile) Email: diamonex@diamonex.com.au Email: diamonex@diamonex.com.au Will Souter or Rob Adamson Richard Hail RFC Corporate Finance Ltd (Nomad) Fox-Davies Capital Ltd (AIM Broker) Tel: +612 9250 0050/+612 9250 Telephone: +44(0) 20 7936 5200 0041 Email: will.souter@rfc.com.au Email: Richard.Hail@fdcap.com Email: rob.adamson@rfc.com.au Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity DIAMONEX LIMITED ABN Quarter ended ("current quarter") 26 091 951 978 30 SEPTEMBER 2007 Consolidated statement of cash flows Year to Cash flows related to operating activities Current date quarter (3 $A'000 months) $A'000 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (208) (208) (b) development (5,070) (5,070) (c) production (d) administration (801) (801) 1.3 Dividends received 1.4 Interest and other items of a similar nature received 44 44 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) (6,035) (6,035) Net Operating Cash Flows Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (72) (72) (c) other fixed assets 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) (72) (72) Net investing cash flows 1.13 Total operating and investing cash flows (carried (6,107) (6,107) forward) 1.13 Total operating and investing cash flows (6,107) (6,107) (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, 7,216,246 7,216,246 etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 9,260,000 9,260,000 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) (488) (488) 15,988 15,988 Net financing cash flows Net increase (decrease) in cash held 9,881 9,881 1.20 Cash at beginning of quarter/year to date 878 878 1.21 Exchange rate adjustments to item 1.20 (7) (7) 1.22 Cash at end of quarter 10,752 10,752 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A'000 1.23 Aggregate amount of payments to the parties 184 included in item 1.2 1.24 Aggregate amount of loans to the parties Nil included in item 1.10 1.25 Explanation necessary for an understanding of the transactions Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows nil 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest nil Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used $A'000 $A'000 3.1 Loan facilities Nil Nil 3.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter $A'000 4.1 Exploration and evaluation 190 4.2 Development 8,200 Total 8,390 Reconciliation of cash Reconciliation of cash at the end of the quarter (as Current Previous shown in the consolidated quarter quarter statement of cash flows) to the related items in the $A'000 $A'000 accounts is as follows. 5.1 Cash on hand and at bank 1,560 878 5.2 Deposits at call 9,012 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 10,752 878 Changes in interests in mining tenements Tenement Nature of Interest at Interest reference interest beginning at end of (note (2)) of quarter quarter 6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total number Number Issue Amount quoted price per paid up security per (see note security 3) (cents) (see note 3) (cents) 7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions 7.3 +Ordinary 131,391,075 131,391,075 securities 7.4 Changes during quarter 23,278,212 23,278,212 31 cents 31 cents (a) Increases through issues (b) Decreases through returns of capital, buy-backs 7.5 +Convertible Convertible bonds issued in Botswana. Up to 10% debt securities of the bonds are convertible into ordinary (description) shares of the Company at BPW1.83 on 3 September 2011. 7.6 Changes during quarter 50,000 Nil BWP1,000 BWP1,000 (a) Increases (Note 1) AUD185 AUD185 through issues (b) Decreases through securities matured, converted 7.7 Options Exercise Expiry (description and 2,000,000 nil price date conversion 35 cents 28 factor) December 2011 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) Note 1: Application will be made to the Botswana Stock Exchange for listing of these securities. Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: ............................................................ Date: 31 October 2007 (Director/Company secretary) Print name: Paul Crawford ---END OF MESSAGE---