Harry Winston Diamond Corporation Announces Third Quarter Fiscal 2008 Results

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TORONTO, Dec. 12 – Harry Winston Diamond Corporation (TSX: HW, NYSE: HWD) today reported consolidated earnings from operations of $66.3 million for the third quarter of Fiscal 2008, a 79% increase over the prior year’s comparable period. The operating earnings growth was driven by a 22% increase in sales to $176.5 million and a 44% increase in gross margin to $101.9 million. Strong operating results were offset by a $40.6 million foreign exchange loss, or $0.70 per share, primarily resulting from the revaluation of future income taxes. During the third quarter that ended October 31, 2007, the Canadian dollar, relative to the U.S. dollar, strengthened to $1.06, representing a 13% increase over the second quarter. As a result, the Company posted a net loss of $7.4 million or $(0.13) per share compared to net earnings of $18.8 million, or $0.32 per share, in the prior year’s period. Excluding the impact of the foreign exchange loss for the third quarter, net earnings would have been $33.2 million, or $0.57 per share.

Rio Tinto Plc, the operator of the Diavik Diamond Mine, has approved a two-year capital programme to complete the development of an underground mine which secures the future of the Diavik Project beyond 2020. With this new development plan in hand, Harry Winston is well advanced in extending its existing debt facilities which, together with cash flow from operations, will fund Harry Winston’s estimated additional $218 million contribution to complete this project having already contributed $77 million over the last year. To ensure prudent fiscal management it is the intention of the Board of Directors to continue to pay dividends of $0.05 per quarter during the construction period. The Board of Directors has, therefore, declared a dividend of $0.05 per share to be paid on January 21, 2008 to shareholders of record on December 28, 2007.

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