Brazilian Diamonds Limited
TSX : BDY
AIM : BDY

Brazilian Diamonds Limited

June 06, 2006 09:00 ET

Brazilian Diamonds Limited: Update on Alluvial Diamond Mine Feasibility Study

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 6, 2006) - Brazilian Diamonds Limited (TSX:BDY)(AIM:BDY) ("the Company") is pleased to announce that its Santo Antonio do Bonito Alluvial (SAB) joint venture has reported the recovery of diamonds from the initial bulk sampling phase.

Initial testing of the first alluvial bulk sample has yielded 8 diamonds weighing a total of 2.46 carats from approximately 150 m3 of gravel processed to date at the on-site treatment plant. The first 8 diamonds were recovered in a small portion of the initial processing of approximately 550 m3 to 600 m3 of gravel excavated from the first test pit. The two largest stones recovered weigh 0.59 and 0.78 carats respectively with the remaining 6 stones weighing between 0.08 and 0.32 carats each.

Processing of the remainder of the gravel excavated from the first pit is ongoing while a second test pit, designed to provide 2000 m3 of gravel for processing, is currently being excavated. It is anticipated that in total, four pits containing an estimated 9,000 m3 of alluvial material will be excavated for testing during the bulk sampling programme, which is due to be completed by the end of the third quarter 2006.

These results were reported to Brazilian Diamonds by consultants contracted by the Company's joint venture partner, CODEMIG, the Minas Gerais State Government agency responsible for the development of mineral resources. CODEMIG is funding and supervising the bulk sampling and feasibility study at SAB in exchange for a 3.5% over-riding royalty on production from the intended alluvial mining operation.

The joint venture is carrying out this final feasibility study to confirm the parameters for development of economic alluvial diamond mine. Provided the study confirms those economics of the proposed project, the Company's other joint venture partner, Mineracao Rio Novo Ltda ("MRN"), will then re-locate its large scale (6,000 m3 per day) mining equipment currently situated at its recently exhausted alluvial diamond operation in Minas Gerais. Brazilian Diamonds will retain a free-carried 25% interest in the final alluvial mining project.

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Partial test Total gravel Diamonds Total weight
volume (m3) test volume (m3) Recovered (carats)
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150 - 160 600 8 2.46
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While the sample size being reported is still too small to be representative of a full-scale alluvial mining operation, the Company is encouraged by these early results as they compare favourably with the Company's own earlier bulk sampling of 345 m3 (in situ) of terrace gravels taken from the same area. The Company's early bulk sampling produced 3 diamonds weighing 30 carats, including a large single stone weighing 27.4 carats.

The recovery of multiple small diamonds from this new sample is especially encouraging in light of the Santo Antonio do Bonito River's history of producing very large stones which historically have tended to skew bulk sampling results. A five kilometre stretch of the river upstream from the alluvial bulk sample site is reported to have produced at least 9 gem quality diamonds of between 328 and 727 carats apiece.

In addition to the alluvial bulk sampling programme, Brazilian Diamonds is continuing with its own kimberlite exploration programme along the headwaters of the Santo Antonio do Bonito River to locate any bedrock (kimberlite) diamond sources for these alluvial stones and while it is also carrying out exploration on other priority diamond targets elsewhere in the Minas Gerais.

Dr. Harrison Cookenboo (P.Geo) and Consulting Geologist is a Qualified Person as defined under National Instrument 43-101 and is responsible for the technical disclosure in this release and has reviewed and approved the contents of this release.

Editors' Note:-

Brazilian Diamonds is a leading Brazil-based exploration company focused on the discovery of kimberlites on its extensive portfolio of properties in the State of Minas Gerais, with the goal of becoming a significant producer of diamonds.

The Company is currently awaiting final approval before commencing the environmental licensing process for the Canastra 1 kimberlite body. Once licensing is complete, Canastra 1 can be brought quickly into production. Mine feasibility work has already been completed and the necessary Mines Department approvals are already in place.

The Company has a fully operational diamond separation/analysis laboratory at Patos de Minas, Minas Gerais which is strategically located near its properties in the Santo Antonio and Coromandel areas. The Company has a staff of approximately 85 people, including 5 full time geologists almost all of whom are located at the Company's facilities in Brazil.

The Company's strategy for non-core activities on its properties is to form joint ventures: a Cdn$800,000 feasibility study is currently underway for a joint venture for the mining of alluvial diamonds on its properties in the Santo Antonio river drainage. The joint venture involves two important Brazilian companies: CODEMIG, the state owned mining development organisation and Mineracao Rio Novo Ltda., a wholly owned subsidiary of Andrade Gutierrez SA, one of Brazil's largest civil engineering firms and an existing large scale, dredge based producer of alluvial diamonds.


Contact Information

  • Brazilian Diamonds Limited
    Ken Judge
    Chairman
    + 011 44 7733 001 002
    or
    Brazilian Diamonds Limited
    Stephen Fabian
    President & CEO
    + 011 55 31 8814 5111
    or
    Brazilian Diamonds Limited
    Investor Relations
    Europe
    + 011 44 20 7590 5503
    or
    Brazilian Diamonds Limited
    Investor Relations
    North America
    1-866-689-2599
    www.braziliandiamonds.com
    or
    Westhouse Securities LLP (Nomad to the Company)
    Tim Feather
    + 011 44 161 838 9140
    or
    Teather & Greenwood Limited (Broker to the Company)
    James Maxwell
    + 011 44 207 426 9000
    or
    Teather & Greenwood Limited (Broker to the Company)
    Harry Nicholas
    + 011 44 207 426 9000