Tahera updates its proposed refinancing plan

Tahera Diamond Corporation provides an update on its refinancing activities.

Tahera has obtained receipt for a preliminary prospectus in connection with its previously announced Rights Offering (the “Rights Offering”). Tahera is working on clearing its prospectus for final filing as soon as possible for a Rights Offering of approximately $36.7 million.

Tahera also has entered into an agreement with Tiffany & Co. (Tiffany) regarding the conversion into equity of certain debt it owes to Tiffany. Tiffany has agreed to convert a portion of the debt into that number of Tahera common shares equal to 19% of the issued and outstanding common shares following the closing of the Rights Offering and after giving effect to the Tiffany conversion transaction. The Tiffany agreement will be effective once Tahera has successfully completed the filing of a final prospectus relating to the Rights Offering, which filing must be completed by December 18, 2007, under the terms of the agreement.

In addition, the Company’s mining contractor, Nuna Logistics Limited (Nuna) has agreed to convert $3.15 million of the amount Tahera currently owes to it into Tahera common shares. As part of the agreement, Nuna has agreed to make certain concessions with respect to labour and equipment costs.

Each of the conversion transactions will be effected based on a conversion price relative to the market price of the Tahera common shares less a 25% discount, but at a price no less than the Rights Offering subscription price, proposed to be $0.14 per unit.

Both the Tiffany and Nuna conversion transactions are conditional upon Tahera being successful in raising a minimum of $30 million in the Rights Offering, and are subject to entering into definitive agreements and obtaining regulatory approvals.

In connection with its Rights Offering, the Company has received confirmation from its largest shareholder, Teck Cominco Limited, which owns approximately 16% of the outstanding common shares of Tahera, that it does not intend to participate in the Rights Offering. Teck Cominco remains however, very supportive of the Jericho mine and will continue to provide operational and technical support to the Jericho mine on an as needed basis. Dundee Precious Metals Inc., the second largest shareholder of the Company, holding 8% of the outstanding common shares of Tahera, has indicated that at this point in time it is unsure whether it will participate in the Rights Offering.

Although the Company has continued to make progress with its improvement plan at the Jericho Mine, continuing financial losses have been incurred and, as a result, its financial position has deteriorated. The continuing negative cash flows being experienced from the Jericho Mine operations, combined with the requirement to fund the upcoming winter road inventory purchases, have led to the current need for additional financing. Failure by the Company to raise $30 million in the Rights Offering would result in the Company not being able to take advantage of the upcoming winter road re-supply and further develop and implement its program of operational improvements at the Jericho Mine. The Company will then face significant and dire financial difficulties. Failing to find an alternative source of financing, Tahera would be forced to consider various alternatives such as interrupting activities at the Jericho Mine, mine closure, sale of the Company or seek creditor protection under Canadian insolvency legislation.

Given its current financial position, Tahera may require between $3 million to $5 million in bridge financing to satisfy its current obligations prior to the completion of the Rights Offering. Tahera has not yet made any arrangements with respect to such bridge financing and there is noassurance it will be successful in obtaining such financing, if it becomes necessary.

Despite a successful Rights Offering, negative cash flow generated by the Jericho Mine may continue, and Tahera may be required to seek further financing and/or explore other alternative measures in the future, including placing the Jericho Mine on care and maintenance for a certain period of time. Factors such as delays to realize the benefits expected from operational improvements, the continued high value of the Canadian dollar versus the U.S. dollar and the price of diamonds failing to increase in accordance with expected trends, are factors which may prevent the Company from improving cash flow generated from its operations.

Tahera’s Rights Offering is subject to obtaining all regulatory approvals, including obtaining a receipt for a final prospectus from the Canadian securities regulatory authorities of each province of Canada.

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