Tahera Diamond Corporation: First quarter report

TORONTO, May 4 /PRNewswire-FirstCall/ --

Jericho Diamond Mine: - The total number of dry tonnes processed was 171,000 for the first quarter of 2007, at an average grade of 0.44 carats per tonne, resulting in carat production of 74,500 carats. - The value of production for the first quarter of 2007, based on Government Diamond Valuations ("GDV") values, was $6.4 million USD. When applying exchange rates at the time of the GDV valuation dates, the equivalent Canadian dollar value of production was $7.3 million. The total cash operating cost related to the production of these goods was $17.1 million. - The 2007 winter road was open for approximately 10 weeks, allowing the Company to fully mobilize all of its desired supplies, equipment, and spares that it needs for the upcoming year. - Operational issues lead to the completion of various analyses and assessments conducted through the utilization of the Technical Support Agreement with Teck Cominco Limited. The following improvement items have or will be addressed over the next two quarters: - Reduced throughput to focus mining efforts on waste stripping. - Purchased, mobilized and commissioned a jaw crusher to improve plant efficiency. - Introduced smaller sieve size screen on primary screen in order to capture a greater proportion of smaller goods. - Independent batch testing of the different geological lobes will be completed. - Process plant monitoring program to be completed. - Complete conversion to rotary drill use in the pit blasting program is being investigated. - Realignment of pit ramps and benches will be undertaken. - Improved grade control measures are being implemented. Corporate: - Continuing negative cash flows being experienced at the Jericho Diamond Mine operations, combined with the requirement to fund winter road inventory purchases, led to the completion of a $22.5 million financing on April 17, 2007. - Mr. Grant Ewing, Executive Vice President, Corporate Development and Mr. Daniel Johnson, Executive Vice President, Operations have advised that they will be leaving the Company during the second quarter to pursue other business interests. Exploration: - 500-tonne bulk sample collected on the JD-3 kimberlite and sent for processing at De Beers Canada Inc.'s dense media separation laboratory in Grand Prairie. Processing results are expected later this year. - A drilling program on the Anuri kimberlite began during the quarter and is expected to be completed by the end of May. - A geophysics program will be completed on the Rockinghorse, Polar and Jericho properties. - 2007 exploration programs are budgeted at $8 million and will be funded through existing flow-through funds.

Please refer to Tahera's website (http://www.tahera.com/) or http://www.sedar.com/ to view the complete first quarter report including the management discussion and analysis, financial statement and the notes thereto.

Mr. Dan Johnson is Tahera's qualified person as defined in National Policy 43-101 for its Jericho property and has supervised the preparation of the technical information included in this press release. Mr. Johnson is an officer of Tahera and is not considered independent of Tahera.

Mr. Dale Mah, P. Geol., is Tahera's qualified person as defined in National Policy 43-101 for its exploration programs and has supervised the preparation of the exploration 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 Standard Time on Monday, May 7, 2007. Interested parties are invited to participate in the call by dialing 416-644-3424 or toll-free 1-800-594-3790. To access a conference replay (available at 1:00 p.m. EST), dial 416-640-1917 or toll-free 1-877-289-8525 and enter pass code 21231093, followed by the number sign.

2007 First Quarter Results

At March 31, 2007, Tahera's cash and cash equivalents balance is $7,443,000, a decrease of $20,114,000 from the balance at December 31, 2006. The Company incurred significant expenditures during the first quarter, as fuel, explosives and other supplies were mobilized on the winter ice road to the Jericho Diamond Mine. The Company realized revenues of $10,513,000 and an operating loss of $15,749,000 during the period. The Company recorded a net loss for the first quarter of $14,740,000 ($0.08 per share), as compared to income of $3,432,000 ($0.02 per share) for the first quarter of 2006.

Financial Statement Highlights (in thousands of Canadian dollars, except for per share data): As at As at Mar. 31, Dec. 31, 2007 2006 (unaudited) ----------- ----------- Current Assets $ 36,498 $ 44,885 Capital and Other Assets 206,822 203,069 ----------- ----------- $ 243,320 $ 247,954 ----------- ----------- ----------- ----------- Current Liabilities $ 47,675 $ 31,469 Long-Term Liabilities 39,982 43,624 Share Capital - Common Shares 186,489 189,509 Common Share Purchase Warrants 9,212 9,212 Contributed Surplus 5,527 5,049 Deficit (45,649) (30,909) Accumulated Other Comprehensive Income 84 - ----------- ----------- $ 243,320 $ 247,954 ----------- ----------- ----------- ----------- Three Three Months Months Ended Ended Mar. 31, Mar. 31, 2007 2006 (unaudited) (unaudited) Revenues $ 10,513 $ - Cost of Goods Sold 26,262 - ----------- ----------- Operating Loss (15,749) - Corporate, General and Administrative Expenses (1,111) (1,384) Amortization of Non-Operating Assets (103) (64) Other Items (797) 99 ----------- ----------- Loss for the Period before Income Taxes (17,760) (1,349) Provision for Income Taxes - Current - (74) Recovery of Income Taxes - Future 3,020 4,855 Net (Loss) Income for the Period $ (14,740) $ 3,432 ----------- ----------- ----------- ----------- (Loss) Earnings per Share - Basic and Diluted(1) $ (0.08) $ 0.02 ----------- ----------- ----------- ----------- Cash Flows From (Used In): Operating Activities $ (12,398) $ (659) Investing Activities (7,253) (18,841) Financing Activities (463) 23,557 ----------- ----------- Net (Decrease) Increase in Cash and Cash Equivalents (20,114) 4,057 Cash and Cash Equivalents - Beginning of Period 27,557 15,445 ----------- ----------- Cash and Cash Equivalents - End of Period $ 7,443 $ 19,502 ----------- ----------- ----------- ----------- (1) Per share information has been retroactively restated to give effect to the one-for-five share consolidation that was approved by the Company's shareholders on May 15, 2006. 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