Tahera Diamond Corporation: Second Quarter Report

    TORONTO, Aug. 7 /PRNewswire-FirstCall/ -
 
     Jericho Diamond Mine:
 
     -   The operational review continued through the second quarter, with
         excellent progress in a number of areas, including improved grades.
         The total number of dry tonnes processed was 95,500 tonnes for the
         second quarter of 2007, at an average grade of 0.78 carats per tonne,
         resulting in carat production of 74,000 carats. However, if the
         re-processing of the coarse processed kimberlite ("PK") stockpile
         material is excluded, the total number of dry tonnes processed was
         77,000 tonnes, at an average grade of 0.90 carats per tonne. Overall,
         total tonnes processed decreased by 42% compared to the first
         quarter, mainly due to the plant testing completed during the
         quarter. The grade increased by 73% quarter-over-quarter, as a result
         of improvements made to the plant and an improved mix of material.
 
     -   The value of production for the second quarter of 2007, based on
         Government Diamond Valuation ("GDV") values, was US$6.4 million. When
         applying exchange rates in effect at the GDV valuation dates, the
         equivalent Canadian dollar value of production was $6.9 million. The
         total cash operating cost related to the production of these goods
         was $16.0 million.
 
     -   Mining efforts focused on waste stripping, resulting in the exposure
         of the 430-metre bench level, with the exception of the south lobe.
         The Company expects that it will now be able to either maintain
         exposure to a number of the various ore types or develop sufficient
         stockpiles to enable continued blending of ore feed to the processing
         plant.
 
     -   Screen panels were reduced from 1.25mm aperture screens to 1.00mm
         aperture screen panels. In order to test the impact of the smaller
         screen panels, the Company conducted audits on the PK stockpile. In
         total, 13,455 tonnes of PK material was reprocessed, yielding
         3,170 carats, for a grade of 0.236 carats per tonne. These results
         help to explain the difference in the grade achieved during 2006 when
         compared to the bulk sample results.
 
     -   The batching program began with the processing of the central lobe
         F6 ("F6") material. In total, 14,303 dry tonnes of F6 material was
         processed over a 14-day period, yielding 22,294 carats, for an
         average grade of 1.56 carats per tonne. These goods were valued by
         the government valuators separately from the normal run-of-mine
         production and were assigned a value of US$101 per carat.
 
     -   Other improvements during the second quarter include the introduction
         of a more rigorous system of tracking, collecting and disseminating
         information related to plant performance, the establishment of
         regular maintenance procedures, the addition of production geologists
         and mine engineers, the repositioning of the pit ramps and the
         purchase, mobilization and installation of a jaw crusher.
 
     -   During the second quarter, the Company appointed Mr. Michael Johnson
         as the Interim Director of Operations at the Jericho Mine site.
         Mr. Johnson has been involved with the exploration and data analysis
         of the Jericho kimberlite for the past nine years, including
         contributing to the development of the feasibility study, and was
         recently the exploration manager for the Company from 2002 to early
         2007. Mr. Johnson brings an extensive understanding of kimberlite
         evaluation and diamond processing to the project.
 
     -   During the month of July, the Company processed 40,000 tonnes of
         kimberlite at an average grade of 0.88 carats per tonne, resulting in
         approximately 35,000 carats.
 
     Corporate:
 
     -   The Company has been making excellent progress with its improvement
         plan; however, as the plant is not running at full capacity due to
         the various tests being performed, additional financial losses have
         been incurred, leading to the need for a comprehensive financing plan
         involving all of the Company's major stakeholders.
 
     -   During the quarter, the Company completed the sale of 22,500,000
         units from treasury at a price of $1.00 per unit for gross proceeds
         of $22,500,000. Each unit is comprised of one common share and
         one-half of one common share purchase warrant.
 
     -   Also during the quarter, the Company drew funds totalling $2,500,000
         under the working capital facility with Tiffany & Co.
 
     Exploration:
 
     -   The 500-tonne bulk sample taken from the JD-3 kimberlite in the first
         quarter was processed during the second quarter and the resulting
         heavy concentrate has been shipped to the Kennecott Canada Inc.
         laboratory in Thunder Bay, where the recovery of diamonds will take
         place. This process is expected to take approximately one month, at
         which point a diamond grade for the bulk sample will be available.
 
     -   Drilling and ground geophysics programs were completed on the
         Rockinghorse property during the quarter.
     Please refer to Tahera's website (www.tahera.com) or www.SEDAR.com to
 view the complete second quarter report including the management discussion
 and analysis, financial statement and the notes thereto.
     Mr. Dale Mah, P. Geol., is Tahera's qualified person, as defined in
 National Policy 43-101, and has supervised the preparation of the technical
 information included in this press release. Mr. Mah is an employee of
 Tahera and is not considered independent of Tahera.
     Tahera has scheduled a conference call at 11:00 a.m. Eastern Daylight
 Time on Wednesday, August 8, 2007. Interested parties are invited to
 participate in the call by dialing 416-644-3426 or toll-free
 1-800-587-1893. To access a conference replay (available at 1:00 p.m. EDT),
 dial 416-640-1917 or toll-free 1-877-289-8525 and enter pass code 21242752,
 followed by the number sign.
     2007 Second Quarter Results
     At June 30, 2007, Tahera's cash and cash equivalents balance is
 $12,813,000, a decrease of $14,744,000 from the balance at December 31,
 2006. The decrease is due primarily to negative cash flows from operations
 and the significant expenditures made in early 2007 to mobilize fuel,
 explosives and other supplies on the winter ice road. The Company realized
 revenues of $15,299,000 and an operating loss of $30,641,000 during the
 period. The Company recorded a net loss for the first six months of 2007 of
 $31,676,000 ($0.16 per share), as compared to income of $2,553,000 ($0.02
 per share) for the comparable period of 2006.
     Financial Statement Highlights (in thousands of Canadian dollars,
     except for per share data):
 
                                                         As at          As at
                                                 Jun. 30, 2007  Dec. 31, 2006
                                                    (unaudited)
 
     Current Assets                                  $  36,753      $  44,885
     Capital and Other Assets                          206,935        203,069
                                                 -------------- --------------
 
                                                     $ 243,688      $ 247,954
                                                 -------------- --------------
                                                 -------------- --------------
 
     Current Liabilities                             $  46,878      $  31,469
     Long-Term Liabilities                              37,126         43,624
     Share Capital - Common Shares                     205,432        189,509
     Common Share Purchase Warrants                     11,631          9,212
     Contributed Surplus                                 5,121          5,049
     Deficit                                           (62,585)       (30,909)
     Accumulated Other Comprehensive Income                 85              -
                                                 -------------- --------------
 
                                                     $ 243,688      $ 247,954
                                                 -------------- --------------
                                                 -------------- --------------
 
                                                    Six Months     Six Months
                                                         Ended          Ended
                                                 Jun. 30, 2007  Jun. 30, 2006
                                                    (unaudited)    (unaudited)
 
     Revenues                                        $  15,299      $       -
     Cost of Goods Sold                                 45,940              -
                                                 -------------- --------------
 
     Operating Loss                                    (30,641)             -
 
     Corporate, General and Administrative
      Expenses                                          (1,968)        (2,530)
     Amortization of Non-Operating Assets                 (210)          (145)
     Other Items                                        (1,877)           291
                                                 -------------- --------------
 
     Loss for the Period before Income Taxes           (34,696)        (2,384)
 
     Recovery of Income Taxes - Current                      -             82
     Recovery of Income Taxes - Future                   3,020          4,855
                                                 -------------- --------------
 
     Net (Loss) Income for the Period                $ (31,676)     $   2,553
                                                 -------------- --------------
                                                 -------------- --------------
 
     (Loss) Earnings per Share - Basic and
      Diluted                                        $   (0.16)     $    0.02
                                                 -------------- --------------
                                                 -------------- --------------
 
     Cash Flows From (Used In):
       Operating Activities                          $ (24,200)     $     466
       Investing Activities                            (13,424)       (36,169)
       Financing Activities                             22,880         31,399
                                                 -------------- --------------
 
     Net Decrease in Cash and Cash Equivalents         (14,744)        (4,304)
     Cash and Cash Equivalents - Beginning of
      Period                                            27,557         15,445
                                                 -------------- --------------
 
     Cash and Cash Equivalents - End of Period       $  12,813      $  11,141
                                                 -------------- --------------
                                                 -------------- --------------
 
 
     Cautionary Statement Regarding Forward-Looking Information
     This press release contains "forward-looking information" that reflects
 Tahera Diamond Corporation's current beliefs, plans, objectives, estimates,
 intentions, expectations and projections about its future results. When
 used in this press release, words such as "estimate", "intend", "expect",
 "anticipate" and similar expressions are intended to identify
 forward-looking information, which is based on the opinions and estimates
 of management at the date the statements are made. By its very nature,
 forward-looking information is subject to risks and uncertainties and other
 factors that could cause Tahera Diamond Corporation's actual results,
 performance, prospects or opportunities to differ materially from those
 expressed in, or implied by, forward-looking information. These risks,
 uncertainties and factors may include, but are not limited to exposure to
 interest rate fluctuations, foreign currency risks, changes in federal,
 provincial and territorial laws, rules and regulations relating to the
 Company's business and environmental matters, changes in tax regulations
 and accounting pronouncements, the inherent risks involved in the
 exploration, development, and mining of mineral properties, the
 uncertainties involved in interpreting drilling results and other data,
 fluctuating commodity prices, unforeseeable adverse climate conditions, the
 possibility of cost overruns or unanticipated costs and expenses,
 uncertainties relating to the availability and costs of financing needed in
 the future, other factors and the accuracy of management's assumptions.
     Specifically, in making statements concerning future estimated grades
 the, Company has assumed that mining operations will proceed in the normal
 course according to schedule and that the statistical computations and the
 assumptions used and judgments made in interpreting engineering and
 geological information will prove to be correct. There is significant
 uncertainty in any mineral resource estimate and the actual deposits
 encountered may differ materially from the Company's estimates. With
 respect to statements concerning diamond prices, Tahera has assumed that
 current world economic conditions and current rough diamond supply and
 demand fundamentals will not materially change. Operating cost estimates
 have been based on the Company's experience to date; however increases in
 labour and fuel costs and any unforeseen mining issues could materially
 impact these forecasts. While the Company considers these assumptions to be
 reasonable based on information currently available to it, they may prove
 to be incorrect.
     Readers are cautioned not to place undue reliance on these
 forward-looking statements, which speak only as of the date of this press
 release or as of the date otherwise specifically indicated herein. Due to
 risks and uncertainties, including the risks and uncertainties identified
 above and elsewhere in this press release, actual events may differ
 materially from current expectations. Tahera Diamond Corporation disclaims
 any intention or obligation to update or revise any forward-looking
 information, whether as a result of new information, future events or
 otherwise.
     The above press release makes reference to certain non-GAAP financial
 measures such as cash operating costs and value of production, to assist
 the reader in assessing the Company's financial performance. Non-GAAP
 financial measures do not have any standard meaning prescribed by GAAP and
 are therefore unlikely to be comparable to similar measures presented by
 other issuers. See "Non-GAAP Financial Measures" in the Management's
 Discussion & Analysis.
     On Behalf of the Board,
 
     R. Peter Gillin
     Chairman and CEO
     Tahera Diamond Corporation
 
 

SOURCE Tahera Diamond Corporation

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