Woodbois Regulatory News (WBI)

19 July 2010

Obtala Resources plc

 ("Obtala" or "the Company")

Update on Mining and Diamond Recovery, Sierra Leone

·; 23.30 and 11.92 carat 'special' gem quality stones recovered

·; Community Mining Scheme in full operation with 450 local miners employed

·; Evaluation of mining strategy in progress

·; Diamonds recovered reported over 95% gem quality

·; A review of the exploration licences underway

Obtala Resources plc (AIM:OBT), the resources investment and development and production company, today provides an update on its alluvial diamond mining operation at Konoma, Sierra Leone. The mining licences are held by the 100% owned Obtala subsidiary, Sierra Leone Hard Rock Limited ("SLHR").

The Company has recovered a 23.30 carat and 11.92 carat "special" stone from its Bakidu operation in Sierra Leone. In addition to this special stone (defined as being greater than 10.8 carats), six stones of 5.15, 5.16, 5.75, 7.60, 8.86 and 9.05 carats have been recovered.

Over the past two months, Obtala has been evaluating a change in the current mining strategy, adopted from previous workers. Historically most of the production was processed through the main 2Mtpa DMS plant located at Konoma. It is the Company's intention to revise this strategy in an attempt to reduce operating costs and improve overall production rates, by using a number of lower-cost mobile DMS plants which will be strategically located along the Bafi River. These smaller units will allow for focused, localised mining with reduced haulage distances and operating costs. Obtala is currently operating a 5tph DMS at the Bakidu site, some 15km east of the Konoma main plant.

Historic bulk sampling at Bakidu identified a mineralised palaeo-channel with results indicating that grades of 0.17ct/m3 are achievable, with the current work by Obtala confirming this grade estimate. Obtala has recovered 963.95 carats from 8,336 tonnes of gravel processed at Bakidu, with an average stone size of 0.73 carat per stone. Geological continuity of this channel is possible and represents upside potential for the project. Additional exploration for such palaeo-channels will offer further upside potential and be will locations where the mobile DMS plants will operate in the future.

Additional capital equipment has been purchased with an excavator expected to arrive in-country in late August and an additional excavator expected in late November of this year. Diamonds recovered from the gravels treated are reported at over 95% gem quality.

The local Community Mining Scheme, which is fully endorsed by the Government of Sierra Leone (refer to press release dated 24th March, 2010) is in full operation with 450 local miners employed, with stones expected to be recovered within the next week or so.

Frank Scolaro, Chairman of Obtala, commented: "The results of this work at Bakidu, utilising the mobile DMS unit, illustrates the way forward for the mining strategy of the company. The recovery of the "special" stones with this small scale plant demonstrates that low cost production with high profitability is very achievable. We continue to optimise operations with a view to increasing our production levels, which will be greatly enhanced with the arrival of new mining equipment. The on-going Community Mining Scheme is very encouraging and has helped build our relationship with the local community and I am delighted that they will shortly start to produce stones. We remain focussed on achieving our goal of low cost, quality production which produces a sustainable and profitable business"

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