EDN Elkedra

    ELKEDRA DIAMONDS NL

                                                        Level 1, 130 Hay Street

                                                                Subiaco WA 6008

                                              PO Box 8035, Subiaco East WA 6008

                                                     Telephone: +61-8-6380 2855

                                                     Facsimile: +61-8-6380 1644

                                                 E-mail: elkedra@elkedra.com.au

                                                   Web Site: www.elkedra.com.au

25 May 2006

Centralised Company Announcement Office

Australian Stock Exchange Limited

10th Floor, 20 Bond Street

Sydney NSW 2000

Dear Sir,

CHAPADA PROJECT COMMISSIONING UPDATE AND STANDBY FACILITY A$5M

Chapada Diamond Project Commissioning

Elkedra Diamonds is pleased to advise that gravel feed has now been treated
through the front end Feed Preparation module of the Chapada diamond recovery
plant and a stockpile of washed and screened material is now ready for the ore
flow commissioning of the heavy media section of the plant. The plant services
and tailings disposal systems have also been commissioned. Water testing of the
heavy media circuits is currently in progress and media and gravel feed is
scheduled to be introduced to this section of the plant by the end of the week.
The concentrate from the heavy media module will then provide the feed for
commissioning of the subsequent magnetic separation and X-ray sorting plant
modules.

Chairman, Don Best who is currently in Brazil for the commissioning said "We
are very pleased with the initial performance of the feed preparation section
of the plant. We are not anticipating any major problems with commissioning the
remaining plant modules but realistically we now expect to be recovering
diamonds during the month of June".

New Standby FinanceFacility

As a contingency against unforeseen problems in the initial months of ramping
up production at the Chapada project to full capacity the Company has accepted
an offer of a short term standby facility of A$5 million from LinQ Capital
Limited. Refer attached for further information.

For and on behalf of the Board


M D J Cozijn

Company Secretary

cc: Directors - DB/SR/TT


JOINT RELEASE- LINQ CAPITAL LTD & ELKEDRA DIAMONDS NL
                                                                               
25 May 2006

                         New Lines of Standby Finance                          

LinQ Capital Limited , Responsible Entity of the LinQ Resources Fund (LRF), and
Elkedra Diamonds NL are pleased to announce that they have agreed terms for a
A$5m Standby Finance Facility. The Facility is being put in place as a
contingency against unforeseen problems in the initial months of ramping up
production at the Chapada Diamond Project in Brazil to full capacity. The
Chapada Project is expected to produce its first diamonds in June and is
looking at ramping up production to produce in the order of 30,000 carats of
high quality diamonds annually.

The first line of $3 million, if drawn, will result in the issue of 2,000,000
options exercisable at 90 cents. The second line of $2 million, if drawn, will
result in the issue of 1,000,000 options exercisable at $1.20. Each of the
options will have a four year term. As a minimum, the Company will issue 20% of
each class of options, i.e. 400,000 options exercisable at $0.90 and 200,000
options exercisable at $1.20, on acceptance of this facility. The facility
carries a 10% coupon and is secured.

In September 2005, LRF provided $5 million of project finance to the Company,
proceeds of which were used to develop the Chapada Project. Provision of
additional lines of finance is further indication of the confidence of LinQ
Capital in the Chapada Project.

For further information contact:

Clive Donner Sam Randazzo

LinQ Capital Limited Elkedra Diamonds NL

Tel: 61 8 9488 8888 Tel: +61 8 6380 2855

Email: clivedonner@linqresources.com Email: sam.randazzo@elkedra.com.au



END

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