Perth, Jan 25, 2006 (ABN Newswire) - Dwyka Diamonds Limited (ASX: DWY)("Dwyka"), the AIM and ASX listed diamond producer and project developer, today announces that the plant for the retreatment of De Beers' tailings, currently under construction in Kimberley, South Africa, is due to commence production in March of this year.

Improvements to the original plant design are taking place with the installation of higher capacity components in some areas to ensure throughput targets are met comfortably, and can be exceeded if required. The recovery section of the plant has also enhanced. The modifications have made minimal impact on the capital requirements and the plant is now scheduled to ramp up to 50,000 tonnes per month of feed in the first week of March. All additional components have been delivered to the plant site and are in the process of being installed.

The De Beers mine dumps to be treated De Beers commenced mining at Kimberley in 1888 with initial operations resulting in what is considered to be the largest hand dug excavation in the world - the "Big Hole". De Beers operations have continued at Kimberley since that time resulting in vast mine dumps. The material processed by De Beers and finally stockpiled in the mine dumps has been subjected to various types of processing. A large proportion of the material has only been subjected to relatively coarse crushing resulting in inefficient liberation of the diamonds, a large proportion of which remain in the stockpiled material. These stockpiles, established over 100 years of mining, are a valuable resource and are the focus of the processing agreement with De Beers.

Dwyka has a 40% interest in the processing enterprise which has been funded by a combination of debt and equity. Under the terms of the agreement with De Beers, diamond grades are guaranteed.

Commenting today Melissa Sturgess, Executive Chairman of Dwyka, said "One of Dwyka's strengths in diamond processing is to ensure that projects run at optimum levels. After a careful assessment of the tailings plant several areas were identified in which production could be enhanced, with minimal additional expenditure. The additional efforts have the potential to significantly increase the returns of this project for Dwyka's shareholders."