Shear Diamonds Ltd. announced that it has suspended production of its high grade stockpiles at the 100% owned Jericho diamond mine as a result of continuing weak world diamond prices. During this interim phase and until prices improve, Shear will look at exploration assets proximal to the Jericho site such as its Carat and Muskox properties, coupled with further definition of its in situ diamond resource at Jericho that will include diamond results from Shear's in pit drilling. Having successfully recovered a significant number of carats from the high grade concentrate stockpiles and having successfully re-established continuing around-the-clock production at Jericho over the last months, Shear has demonstrated that a significant number of diamonds went unrecovered during Jericho's previous operations.

World diamond market prices have dropped sharply, well below Shear's break even prices. This drop has posed significant challenges to Shear's finances. In June, Shear and its diamond marketing partner and lender, Tache Company N.V. had determined to continue funding production from the high grade stockpiles.

Shear and Tache jointly have deferred end user sales of the parcels that had been shipped to Tache in the hope that diamond prices would recover relatively quickly. Shear has accomplished two significant milestones for the year - renewal of Type A Water Licence plus around the clock production and diamond recovery from stockpiles. Given the continuing low prices, the decision has therefore been to suspend production and to seek financing or alternative transactions to move the project and exploration forward, in order to be in the position to proceed to production when diamond markets recover.