Highlights of the third quarter:

• Completed summer exploration program
• Signed formal Inuit Impact Benefit Agreement (IIBA) with the Kitikmeot Inuit Association
• Continued negotiations with respect to a diamond marketing/finance agreement with potential marketing partners resulting in an agreement with Tiffany & Co.

Development

Tahera is focused on developing its wholly-owned Jericho Diamond Project as Nunavut’s first diamond mine. During the mine development phase, Tahera will continue to be an active diamond explorer over its highly prospective exploration properties.

Federal approval of the Jericho Diamond Project was received in June 2004, marking the successful completion of the environmental review process. Tahera is now working toward finalizing the required authorizations for the project, including the water license and land leases. The dates for the final water permit hearing have been set for December 6 and 7, 2004. This schedule meets the Company’s timetable for development of the project, which contemplates commencement of construction in early 2005, and attainment of commercial production in early 2006.

Tahera decided to expand the processing capacity of the Jericho diamond plant in order to provide operating flexibility to process, rather than stockpile, lower grade kimberlite during the early years of production. Tahera believes that the expanded plant capacity provides an opportunity to potentially capitalize on both the robust diamond markets, and on the possible conversion of a considerable quantity of inferred mineral resources and indicated mineral resources to mineral reserves. In addition, Tahera has examined the potential of mining the Jericho Diamond Project with an expanded open pit operation. The evaluation assesses the scenario of processing the inferred mineral resources and additional indicated mineral resources of the project. The Company will complete further detailed engineering work over the coming months prior to commencement of construction activities.

Diamond Purchase and Marketing Agreement

During the quarter, the Company continued to discuss possible marketing and financing arrangements with several parties. Shortly after the quarter end, Tahera announced the signing of a Letter of Intent with Tiffany & Co. with respect to diamond purchases, marketing and project financing for its Jericho Diamond Project. Pursuant to the agreement, a subsidiary of Tiffany will purchase or market all of the diamond production, and provide Tahera with a Cdn.$35 million loan facility to assist in financing construction of the project. Definitive documents are expected to be signed in November 2004.

Exploration

Tahera’s summer exploration program included drilling targets on the Jericho Claims and the Polar Project, as well as geophysical surveys and till sampling. A regional exploration program was also completed. On the Jericho Claims, the inferred strike length of the Bird Lake dyke structure was extended up to 300 metres. The steeply-dipping dyke system remains open to the northwest and at depth. The Polar Group exploration program was the first activity undertaken since Tahera entered into an agreement with De Beers on the property. The program was designed to locate and investigate exploration targets for upcoming programs, as well as drill test targets within several priority areas.

Planning for the 2005 exploration program is underway. Tahera’s exploration efforts will focus on building additional diamond reserves in the area of the planned Jericho development. On this front, further evaluation of several diamondiferous kimberlites that exist within close proximity to the Jericho Diamond Project on the both the Polar Group and the Jericho Claims is planned. The program will also focus on identifying the sources of several promising unresolved kimberlite indicator mineral trains in the area. Planning for the 2005 exploration program on the Company’s other highly prospective exploration properties (Rockinghorse property and Hood River property) is also underway.

IIBA

Tahera and the Kitikmeot Inuit Association signed the formal Inuit Impact Benefit Agreement (IIBA) for the Jericho Diamond Project in September 2004. The formal signing of the IIBA follows an agreement in principle that was reached in late 2003. The IIBA outlines the benefits that will be provided to Inuit as a result of the development and operation of the Jericho diamond mine. The completion of the IIBA represents a significant accomplishment on the road to development of the Jericho Diamond Project as Canada’s next diamond mine.

Financing

Subsequent to the quarter end, the Company entered into an underwriting agreement to issue 132,500,000 common shares at a price of $0.34 per share for gross proceeds of $45 million. The Company also granted the underwriters an option to purchase up to an additional 15,335,000 common shares for additional proceeds of up to $5.2 million. It is expected that the offering will be completed on November 8, 2004. These funds together with the credit facility provided by Tiffany, current cash balances, and future proceeds from option and warrant exercises should be adequate to fund capital and normal operating expenditures to commercial production, currently expected to be achieved during the first half of 2006.

2004 Third Quarter Results

At September 30, 2004, Tahera’s cash balance was $12,057,000. The Company recorded a loss of $571,000 ($0.001 per share) for the quarter ended September 30, 2004, which compares with a loss of $444,000 for the quarter ended September 30, 2003 ($0.001 per share). Operating expenses increased moderately to $615,000 for the quarter ended September 30, 2004 compared to $429,000 for the quarter ended September 30, 2003.

Financial Statement Highlights (in thousands of Canadian dollars, except per share data):



Please refer to Tahera’s website (www.tahera.com) to view the complete third quarter report for the nine months ended September 30, 2004.

On Behalf of the Board,

R. Peter Gillin
Chairman and CEO
Toronto November 3, 2004

About Tahera Diamond Corporation
Tahera Diamond Corporation is a unique Canadian diamond Company focused on developing its wholly-owned Jericho Diamond Project as CANADA'S NEXT and NUNAVUT'S FIRST DIAMOND MINE. Tahera recently entered into a letter of intent with Tiffany & Co., one of the world’s leading jewelers, with respect to a diamond purchase, marketing, and finance agreement for the Jericho Diamond Project. Tahera has several other very prospective diamond projects in Canada's prolific Slave Craton. The common shares of the Company trade on the TSX under the symbol 'TAH'.

Tahera Diamond Corporation
Grant Ewing – Executive Vice President, Corporate Development

Investor Relations:
Tel: (416) 777-1998 Fax: (416) 777-1898 Toll free: (877) 777-2004
Email: investor_relations@tahera.com  
Website: www.tahera.com