Williamson Diamonds Limited The project entails a corporate loan, coupled with a warrants package, from IFC and a South African bank (SA Bank) to Petra Diamonds Limited (Petra) to: (i) finance the mine expansion program at the Williamson Diamond Mine (Williamson) in Tanzania; and (ii) finance the mine expansion program at the Cullinan Diamond Mine in South Africa (Cullinan), as well as Petras general corporate needs (collectively, the Project).

The proceeds of IFCs loan will be used over the next 3 years to finance the Williamson expansion. A parallel loan from SA Bank will be used to complete the Projects funding plan, including financing the Cullinan expansion program. The Cullinan and Williamson mine expansion programs are expected to substantially improve the economics of each mine. Going forward, Cullinan and Williamson are expected to represent a significant portion of Petras net asset value.

Petra has a 75% stake in Williamson, with the balance of 25% held by the Government of Tanzania. Williamson currently has a resource of some 40 million carats (995 million tons of kimberlite) and is renowned as a source of extremely rare, fancy pink diamonds. At Williamson, Petra is contemplating increasing throughput to between 7.5-10 million tons per annum (mtpa) by: (i) re-shaping of the open pit to cater for a 10 mtpa extraction rate; (ii) installing an autogenous mill to maximize liberation of the clay-rich RVK material; and (iii) enhancing the diamond recovery system to cater for Type II diamonds.

Petra has a 74% stake in Cullinan, with the balance of 26% held by empowerment partners. The Cullinan mine encompasses 32 hectares at surface and is the second largest indicated diamond resource in the world by in-situ value and totals some 204 million carats (including tailings). At Cullinan, Petra plans to: (i) increase throughput from 1.9 to 2.4 mtpa by 2014 by establishing new underground tunnels, upgrading existing winders, and deepening existing shafts, and (ii) construct a 1 mpta tailings treatment facility by 2012. Given that IFCs investment is focused towards Williamson, the development impact of the Project is concentrated in Tanzania.

The Tanzanian mining sector contributed about 3.5% of the countrys GDP for the 2008/09 fiscal year. Tanzanias Development Vision 2025 aims to increase this contribution to 10% of GDP by 2025. The Williamson expansion, which contemplates the long-term and economic sustainability of a 70-year old mine, will support this government objective by setting an example and potentially attracting further investments into the Tanzanian mining sector. More specifically, the development impact from the Williamson expansion is expected to include:

(i) Employment: Successful implementation of the Williamson expansion will help maintain the aggregate number of direct and indirect jobs and potentially create opportunities for further indirect employment. Williamson is also expected to introduce skills training to facilitate labor mobility and growth.

(ii) Fiscal Contributions: The Williamson mine has been operating at a loss over the past few years. Petra plans to return the Williamson mine to profitability, and anticipates the mine to start generating royalty payments by FY2013 once the expansion is completed and becoming a tax paying entity by FY2016. As per IFC requirements, Williamson has agreed to publicly disclose all material revenue payments made to the Tanzanian government.

(iii) Community Development: Williamson plans to spend about 2% of revenues on community development, starting in 2013. The mine already contributes directly towards community development through the provisioning of social, commercial, industrial, medical and administrative infrastructures. The Mwadui hospital, which is totally funded by Williamson, provides access to health care facilities for the community as well as various HIV and malaria treatment programs. In partnership with the Elizabeth Glazer Pediatric AIDS Foundation, Williamson conducts a community outreach program which provides education, care and treatment to HIV/AIDS patients in Mwadui and other neighboring communities.

(iv) Support to Local SMEs: A large proportion of Williamsons procurement is expected to be from Tanzanian suppliers, of which a significant percentage is expected to be from local and regional suppliers. Williamson is committed to supplier development and training, and expects to allocate a portion of its community development expenditure to such initiatives.

Key indicators that are proposed to be used to monitor the development impact of the Williamson project during its life are: (i) aggregate direct and indirect employment, by gender, both at Petra and at Williamson; (ii) total taxes and royalties paid by Williamson to the government; (iii) total expenditures incurred by Williamson on community development activities; and (iv) amount of money spent by Williamson on purchases of local and national goods and services.