Nare plans name change, AIM,JSE listing after diamond deal

West Perth-based Nare Diamonds Ltd has signed a joint venture deal with Government-owned Angolan diamond mining company Endiama, ahead of plans for a name change and listing on two foreign exchanges.

The company, which plans to list on the London Stock Exchange's Alternative Investment Market and the Johannesburg Stock Exchange, will change its name to Lonhro Mining Ltd.

UK-based giant Lonrho PLC, in years gone by the London and Rhodesian Mining Company, owns 21.9 per cent of Nare, and according to the Australian firm holds significant goodwill in the business community.

Under the deal the companies will develop a 3,000 sqkm diamond concession in Angola, with Nare paying around $1.7 million, refundable after exploration expenditure of an equal amount by Nare within nine months after signing the Joint Venture agreement.

Nare is also required to fund a work programme for which the first year of exploration expenditure will total US$6 million.

Under the terms of the joint venture, the Company will also receive in priority the funds it has expended on exploration from future cash flow from mining operations.

On all kimberlite deposits Nare's participating interest will initially be 39 per cent of the joint venture which will decrease to 30% after recoupment of its investment in the Project.

On all alluvial deposits Nare's participating interest will be 40 per cent in the joint venture.

The full text of a Nare announcement is pasted below

NARE agrees Lulo diamond joint venture with Endiama, the State owned diamond mining company of Angola, changes name to LONRHO MINING and seeks dual listing on AIM and JSE

Australian based diamond exploration and development company Nare Diamonds Limited (ASX: NDM) ("Nare" or the "Company") announces the commencement of a joint venture on the Lulo Diamond Concession with Endiama, the State owned diamond mining company of Angola and plans to reorganise its corporate structure as part of its strategy to expand its African footprint by becoming a significant resources developer and producer on the African continent.

In summary, the Company intends to:

• Develop a highly prospective 3,000km² diamond concession in Angola (the Lulo concession), with Endiama, the national diamond company of Angola and exclusive concessionary for diamond mining rights;
• Change its name to Lonrho Mining Limited ("Lonrho Mining");
• Seek a dual listing on the Alternative Investment Market of the London Stock Exchange ('AIM') and Johannesburg Securities Exchange ('JSE'); and
• Seek to diversify its activities into a range of resource based opportunities in Africa.

These developments will be subject, inter alia, to the approval of shareholders at an Extraordinary General Meeting. An indicative timetable to give effect to these developments will be released shortly.

Lulo Diamond Concession - Angola

Nare is pleased to advise that it has signed a joint venture agreement with Endiama, the national diamond company of Angola and exclusive concessionary for Angolan diamond mining rights, to develop a highly prospective 3,000km² diamond concession in Angola (the Lulo Diamond Concession). On all kimberlite deposits Nare's participating interest will initially be 39% of the joint venture which will decrease to 30% after recoupment of its investment in the
Project. On all alluvial deposits Nare's participating interest will be 40% in the joint venture.

The Lulo Diamond Concession is located in the Cuango River catchment area within the Lunda Norte Province of northeastern Angola. This concession has been one of the prime targets for Nare in its evaluation of Angolan projects and contains an identified 29 kimberlite pipes and extensive alluvial diamond resources. It is located close to existing proven diamondiferous kimberlite pipes and alluvial diamond resources and is widely seen as a highly prospective concession. The Catoca Mine, which is the third largest kimberlite diamond mine in the world and which produces 60% of Angola's diamond production, is located 150km east of the Lulo Diamond Concession. The joint venture between Petra Diamonds and BHP Billiton on the Alto Cuilo and Luangue project lies adjacent to the Lulo Diamond Concession (see Figure 1). Petra Diamonds has announced that more than 70 kimberlite pipes have been found on Alto Cuilo, the largest of which is 175 hectares in size and is currently being evaluated with encouraging
results received to date.

Under the terms of the joint venture agreement with Endiama, Nare has paid a cash deposit of US$1.4 million which is refundable after exploration expenditure of an equal amount by Nare within nine months after signing the Joint Venture agreement. Nare is also required to fund a work programme for which the first year of exploration expenditure will total US$6 million.

Under the terms of the joint venture, the Company will also receive in priority the funds it has expended on exploration from future cash flow from mining operations.

Lonrho Mining

Following the name change to Lonrho Mining, the management team will continue to be led by Charles Mostert, the CEO of Nare. He is supported by:

• David Lenigas, the Chairman and Chief Executive Officer of Lonrho Plc ("Lonrho") who was recently appointed Chairman of Nare;
• Geoffrey White, Lonrho's COO, who was recently appointed as a non Executive Director of Nare;
• Bêrend van Deventer, Finance Director;
• Will Burbury, Executive Director; and
• Kagiso Chikane (Mrs), non Executive Director.

The proposed change of name to Lonrho Mining will enable Nare to take advantage of and benefit from Lonrho's extensive experience and presence in Africa. Lonrho Mining will look to selectively acquire exploration and producing mining assets across the African continent.

The proposed change of name of Nare to Lonrho Mining is subject to shareholder approval.

Charles Mostert, Chief Executive Officer of Nare, commented:

"The proposed name change to Lonrho Mining and the signing of the Lulo Project is an excellent strategic development for Nare. The Lonrho name is recognised throughout Africa, and its reputation is excellent. The closer ties with Lonrho are already providing Nare with unique access to resources and deal flow throughout Africa whilst the dual listing on AIM, the JSE and the ASX should help Nare to continue to grow rapidly and to develop into a significant African resource company."

"We are very excited about the prospects of the Lulo project. It has an excellent geological address and we will build on past exploration work conducted by Diamang. Spare plant and equipment from our operations in South Africa will be relocated to Lulo to commence exploration activities as soon as possible."

David Lenigas, Chairman and Chief Executive Officer of Lonrho and Chairman of Nare, commented:
"Lonrho has been a shareholder of Nare for some time and recognises that the management team has the proven ability to deliver. They have made significant progress at the Schmidtsdrift operations in South Africa, increasing reserves to some 47 million tonnes of diamond bearing gravel as well as increasing production."

"The closer ties, including changing its name to Lonrho Mining, will enable Nare to utilise Lonrho's heritage and contacts to provide a constant flow of exciting resource related projects. Lulo Diamond Concession in Angola is seen as highly prospective and is situated in one of the most sought after locations in Angola. We see this as the first of several large projects that a new Lonrho Mining can develop in Africa, and illustrates the type of deals the Lonrho name can gain access to. I am sure that the closer relationship and development of Lonrho Mining will prove rewarding for shareholders of Nare Diamonds Ltd."

Update on the Schmidtsdrift Diamond Mine (South Africa)

During the last 12 months, the Company has focused on increasing its diamond production from trial mining operations at the Schmidtsdrift alluvial diamond mine, located in the Republic of South Africa.

As reported to shareholders at the Annual General Meeting in Perth on 30 July 2007, the Company is pleased to report a 57% increase in production since it assumed mining operations in January 2007. The highest month of production was 1,350 carats in May 2007.

The Company intends to increase targeted production further during the next quarter to 1,500 carats per month.

This key milestone will be achieved by:
1. consolidating mining operations to one zone in Mining Zone 1;
2. the commencement of continuous operations at the mine (ie. a 7 day, 24 hour programme);
3. commissioning of a new centralized "state of the art" flowsort recovery plant;
4. opening of new mining zones once operations have been consolidated at Mining Zone 1; and
5. purchase of additional mining fleet to double mining rates to a sustainable 2.2 million tonnes per month.

Issue of Options

The Board has recently been reorganised with the appointment of Mr. David Lenigas as Chairman and Mr. Geoffrey White as a non-executive Director. To appropriately incentivise and reward key personnel to effect the changes and implement the proposed growth strategy outlined above, the Company will, subject to shareholder approval, grant the following share options to Directors, employees and consultants of the Company, subject to the approval of
shareholders:
David Lenigas (Non-executive Chairman) 4 000 000
Charles Mostert (Chief Executive Officer) 6 000 000
Will Burbury (Executive Director & Company Secretary) 5 000 000
Bêrend van Deventer (Finance Director) 5 000 000
Kagiso Chikane (Non-executive Director) 4 000 000
Geoffrey White (Non-executive Director) 4 000 000
Senior Employees and Consultants other than
Board members 11 500 000

The exercise price will be 30 cents per share as shown above, exercisable on or before 30 September 2012.