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Annual Report 2009

Operating Review

Norway

Finland

Sweden

Kuusamo Region

Finland — Diamond Exploration In 2009 the Company’s diamond exploration activity in Finland has been largely suspended as the Company sought to preserve cash reserves. Significant planned exploration work on the Kuusamo or Kaavi-Kuopio kimberlites was postponed during the year, as was drill testing of various high priority kimberlite targets. Mantle Diamonds, which had previously advised of its intention to drill test a number of kimberlite targets in which the Company holds a residual interest, also postponed its exploration programmes in Finland in 2009.

Kaavi-Kuopio Region

Helsinki

Nevertheless, the Company’s claims have been maintained and steps have been taken to re-structure joint venture assets to minimise future expenditure commitments. An important step forward was taken in January 2009 when the Company announced that it had reached an agreement with Nordic Diamonds Ltd to acquire 100% ownership of Nordic’s Kaavi- Kuopio claims in Finland (subject to a royalty in favour of Nordic).

The new agreement replaced and superseded the earn-in and joint venture agreement with Nordic in

History of diamond exploration in Finland The first kimberlite was discovered in Finland in the early 1960’s, close to the city of Kuopio in central Finland. Follow up work in the 1980’s and 1990’s by Ashton Mining and Diamet resulted in the discovery of 25 kimberlites, most of which are now known to be diamond-bearing. These kimberlites occur principally in two clusters, one at Kaavi and one at Kuopio.

Following restructuring of the Nordic Joint Venture, the Company holds claims covering 14 of the known 25 kimberlites in the Kaavi-Kuopio area including Kimberlites 10, 14 and 17, where the Company has previously completed diamond sampling, and a number of other pipes containing diamond grades of economic interest.

During the 1990’s De Beers also carried out extensive exploration programmes throughout eastern and northern Finland. One kimberlite was discovered by De Beers in the Kuusamo area, remote from previous discoveries, but no further work was carried out as this kimberlite was deemed too small. This discovery, on Sunrise Diamonds’ Kalettomanpuro project area, has formed the impetus for the Company’s exploration programme in the Kuusamo area, which led to the definition of a fourth new kimberlite cluster in Finland where seven kimberlites have been discovered by Sunrise Diamonds to date.

BHP Billiton, through its acquisition of Diamet, owns a large database for diamond exploration in Finland, and the

Company, through its agreement with BHP Billiton, has use of this valuable database.

www.sunrisediamonds.com

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