Jewelry and Diamond Sector listings

Because of the high risk high reward character of the diamond exploration industry the Company has, from the beginning, adopted a portfolio approach. Where successful the projects will be brought on sequentially, with the cash flow from one available for the financing of the next and to contribute to exploration of the others. With constrained administrative outlays as well as cash flow management, the objective is to enhance shareholder value by maintaining the tightest possible capital structure.

Over the past three years, Tawana has accumulated an enviable portfolio of diamond projects in Australia, South Africa and more recently in Botswana. These projects range from early stage exploration through to pre-feasiability, in keeping with Tawana’s commitment to becoming a diamond miner in the near future.

Tawana’s interest in South Africa has been focussed in the Limeacre district, containing the Kareevlei Wes, Perdevlei and Daniel Alluvial Projects (DAP) The Kareevlei Wes Project comprises a cluster of 5 kimberlitic pipes (KV1-KV5). Recent reinterpretation of drilling and geophysical data shows that the pipes range in surface area from 0.1ha to 5ha. A Mining Right was granted over Kareevlei Wes projects in April 2007 and a trial mining exercise is planned in 2007 to extract up to 20,000 tonnes of kimberlite.

Initial testing of the Perdevlei kimberlites indicate that these bodies are unlikely to be economic at this point in time. This project is relatively close to Kareevlei Wes and will be reviewed once results from the bulk testing is complete. Work on the DAP,has identified an ancient gravel filled river channel (initially discovered by BHP Billiton utilising its Falcontechnology) and an extensive and high volume diamondiferous gravel deposit, known as Eastern Gravels.

Tawana has recently acquired the rights over a number of prospective projects in South Africa. Tawana has formed a joint venture with Taormina Mining (Pty) Limited on the Riverton kimberlite, a roughly 4ha body some 25km north of Kimberley. Previous work on this kimberlite has indicated that it is diamondiferous and bulk testing will commence in late 2007.

Tawana has secured access to a 60ha mining right known as the Lexshell Alluvial Project in the prolific Vaal alluvial diamond district. This project is the first opportunity for Tawana to participate in its strategic alliance with business partner Guma Resources. Initial drilling will commence in Q3 2007 to test the extent and grade of the gravels at the site with a 2000t bulk sample planned for early 2008.

In early 2007, Tawana secured rights to two highly prospective projects in Botswana. Tawana, through its 100% owned Botswana subsidiary Seolo Pty Ltd acquired sole rights to a prospecting license in the Orapa district, which contains one of the largest producing mines in the world. The license, which covers 57 sq.km. includes 8 known kimberlites. Detailed geophysics and drilling of the kimberlites is planned in 2007 to determine the size and preliminary grade of the bodies. Drilling and large volume sampling would occur on favourable targets. There are several other targets on the licence that Tawana will also test, with the Company confident that other kimberlites will be discovered.

A second Botswana project, known as the Borolong Project, consists of two prospecting licencses in near the countries north east border. Initial reconnaissance samples have been taken and analysis of results is expected in the near future.

In Australia, Tawana has been focused on the Pilbara Joint Venture with De Beers Australia. This Joint Venture includes access to over 3,200sw.km of granted licenses and a further 5,600sq.km. of license applications and is a component of a strategic alliance with De Beers, allowing access to their extensive Australian database.

Several diamondiferous kimberlites are known within the project including the Blacktop kimberlite. Tawana conducted bulk tests of this kimberlite in 2006, extracting over 6000 tonnes of kimberlite and obtaining sample grades up to 8.6carats per hundred tones (cpht). Follow up helicopter sampling by Tawana in 2006 produced some high interest indicator minerals. A review of all data is planned for early 2007, with some follow-up work expected in late 2007.

Tawana recently signed a Joint Venture with Flinders Diamonds Limited (FDL) allowing the latter access to Tawana’s database and South Australian licences in Venus Bay and Flinders Island. Flinders Diamonds can earn 50% interest in these areas by spending $1 million over a four year period.

Tawana retains interest in licenses in the Timber Creek and Whirlwind Plains areas of the Northern Territory, although results are insufficient to warrant further work at this time. Alternative Joint Venture opportunities are being sought.

With demand supply conditions leading to much improved diamond prices, and with the increased investment interest in the sector, the Board of Tawana looks forward to the current year with confidence.