Tahera Diamond Corporation: Third Quarter Report



    TORONTO, Nov. 5 /CNW/ -

    
    Jericho Diamond Mine:

    -  Given the recent appreciation of the Canadian dollar versus the U.S.
       dollar, the rise of oil prices, the relatively modest increases of
       diamond prices and ongoing operational and production issues,
       management determined that a valuation of its Jericho Diamond Mine was
       necessary. As a result, the Company recorded an asset impairment
       charge against the carrying value of the Jericho Diamond Mine at
       September 30, 2007 of $73 million.

    -  The operational review of the Jericho Diamond Mine, which began in
       March 2007, continued through the third quarter. Improvements with
       regard to plant throughput, carats recovered, volume of kimberlite and
       waste rock mined and grade were all achieved. The Company believes
       that further improvements are achievable in the coming months.

    -  The total number of dry tonnes processed during the third quarter of
       2007 was 127,500 tonnes at an average grade of 0.78 carats per tonne,
       resulting in carat production of 99,300 carats. The number of tonnes
       processed and carats produced increased by 33% and 34%, respectively,
       compared with the second quarter.

    -  The value of production for the third quarter of 2007, based on
       Government Diamond Valuation ("GDV") values, was US$8.4 million. When
       applying exchange rates in effect at the GDV valuation dates, the
       equivalent Canadian dollar value of production was $8.6 million. The
       total cash operating cost related to the production of these goods was
       $17.9 million.

    -  Pit development continued in a positive fashion with a total of
       0.214 million tonnes of kimberlite and 1.9 million tonnes of waste
       being mined in the quarter, representing an overall 13% increase
       quarter over quarter.

    -  The batching program continued with a batch consisting of 16,073 dry
       tonnes of F4N material yielding 11,806 carats, for an average grade of
       approximately 0.73 carats per tonne. The goods were valued by the
       Company's valuators separately from the normal run-of-mine production
       and were assigned a value of US$71 per carat.

    -  During the month of October, the Company processed 55,000 tonnes at an
       average grade of 0.85 carats per tonne, resulting in approximately
       47,000 carats. The carat output for October 2007 is the highest
       monthly total since the Jericho operation began.

    Corporate:

    -  Although the Company has continued to make progress with its
       improvement plan, additional financial losses have been incurred and,
       as a result, its financial position has deteriorated. Tiffany & Co.
       ("Tiffany") has agreed to defer scheduled debt repayments due on
       September 30, 2007 to December 31, 2007. The Company intends to raise
       new equity through a share purchase rights offering to its common
       shareholders. It is anticipated, barring any delays, that the rights
       offering would close before the year end of 2007.

    -  In addition, the Company has held discussions with Tiffany regarding
       the conversion into equity of certain of its scheduled debt
       repayments. Tiffany has indicated that it is prepared to convert the
       repayments due at December 31, 2007, which total approximately
       $12.5 million. The Company's mining contractor has indicated its
       willingness to provide certain concessions. Definitive agreements on
       the Tiffany conversion and the mining contractor concessions are
       contingent upon the other components of the financing plan being
       completed, including the successful rights offering.

    Exploration:

    -  The JD-03 kimberlite bulk sample returned 3,746 diamonds larger than
       0.85 millimetres, weighing 134.7 carats, resulting in an average grade
       of 0.27 carats per tonne. These diamonds were valued by the government
       diamond valuators at an average price of US$40 per carat.

    -  Based on the grade and value results of the 2007 bulk sample, no
       further exploration work is planned on the JD-03 kimberlite at this
       time. As a result, the Company recorded a write down of the deferred
       exploration and development expenditures associated with this property
       in the amount of $21.4 million during the third quarter of 2007.
    

    Please refer to Tahera's website (www.tahera.com) or www.SEDAR.com to
view the complete third quarter report, including management's discussion and
analysis, consolidated financial statements 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 Standard
Time on Tuesday, November 6, 2007. Interested parties are invited to
participate in the call by dialing 416-644-3425 or toll-free 1-800-591-7539.
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 21252196, followed by the
number sign.

    2007 Third Quarter Results

    At September 30, 2007, Tahera's cash and cash equivalents balance is
$7,782,000, a decrease of $19,775,000 from the balance at December 31, 2006.
The Company realized revenues of $20,654,000 and an operating loss of
$45,470,000 during the period. The Company recorded a net loss for the first
nine months of 2007 of $143,117,000 ($0.71 per share), as compared to a net
loss of $8,218,000 ($0.05 per share) for the comparable period of 2006. The
current year net loss includes asset impairment charges of $73,000,000 and
write downs of deferred exploration and development balances of $21,444,000.

    Financial Statement Highlights (in thousands of Canadian dollars, except
for per share data):

    
                                                        As at          As at
                                                Sep. 30, 2007  Dec. 31, 2006
                                                   (unaudited)

    Current Assets                                  $  32,098      $  44,885
    Capital and Other Assets                          108,041        203,069
                                                -------------- --------------

                                                    $ 140,139      $ 247,954
                                                -------------- --------------
                                                -------------- --------------

    Current Liabilities                             $  53,875      $  31,469
    Long-Term Liabilities                              37,917         43,624
    Share Capital - Common Shares                     205,432        189,509
    Common Share Purchase Warrants                     11,631          9,212
    Contributed Surplus                                 5,212          5,049
    Deficit                                          (174,026)       (30,909)
    Accumulated Other Comprehensive Income                 98              -
                                                -------------- --------------

                                                    $ 140,139      $ 247,954
                                                -------------- --------------
                                                -------------- --------------


                                                  Nine Months    Nine Months
                                                        Ended          Ended
                                                Sep. 30, 2007  Sep. 30, 2006
                                                   (unaudited)    (unaudited)

    Revenues                                        $  20,654      $   1,279
    Cost of Goods Sold                                 66,124         10,131
                                                -------------- --------------

    Operating Loss                                    (45,470)        (8,852)

    Corporate, General
     and Administrative Expenses                       (2,746)        (3,641)
    Amortization of Non-Operating Assets                 (316)          (249)
    Asset Impairment Charge                           (73,000)             -
    Write down of deferred exploration
     and development                                  (21,444)           (61)
    Other Items                                        (3,161)          (353)
                                                -------------- --------------

    Loss for the Period before Income Taxes          (146,137)       (13,156)

    Recovery of Income Taxes - Current                      -             83
    Recovery of Income Taxes - Future                   3,020          4,855
                                                -------------- --------------

    Net Loss for the Period                         $(143,117)     $  (8,218)
                                                -------------- --------------
                                                -------------- --------------

    Loss per Share - Basic and Diluted              $   (0.71)     $   (0.05)
                                                -------------- --------------
                                                -------------- --------------

    Cash Flows From (Used In):
      Operating Activities                          $ (27,229)     $   6,704
      Investing Activities                            (14,947)       (47,816)
      Financing Activities                             22,401         36,525
                                                -------------- --------------

    Net Decrease in Cash and Cash Equivalents         (19,775)        (4,587)
    Cash and Cash Equivalents
     - Beginning of Period                             27,557         15,445
                                                -------------- --------------

    Cash and Cash Equivalents - End of Period       $   7,782      $  10,858
                                                -------------- --------------
                                                -------------- --------------
    

    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
    

    %SEDAR: 00003313E




For further information:

For further information: Investor Relations, Tel: (416) 777-1998, Fax:
(416) 777-1898, Toll free: (877) 777-2004, Email:
investor_relations@tahera.com

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TAHERA DIAMOND CORPORATION

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