Diagem Inc.
TSX VENTURE : DGM

Diagem Inc.

January 11, 2007 10:24 ET

Diagem Discovers a New Cluster of Kimberlite Pipes Believed to be a Primary Source of the Historical Juina Alluvial Diamonds

MONTREAL, QUEBEC--(CCNMatthews - Jan. 11, 2007) - Diagem (TSX VENTURE:DGM) is pleased to announce the recent discovery of a new cluster of kimberlite pipes on its wholly-owned Property 370/98. Diagem believes them to be an important primary source for the prolific alluvial diamond production in the Juina area. The identification of a diamondiferous layer, identified as primary kimberlitic ash-fall or tuffitic material blanketing the area was the triggering factor. In addition to the potential represented by the kimberlite, this tuffitic layer is also attractive as it, together with the top weathered portion of the kimberlites, are easily accessible and can be mined as an alluvial deposit with a relatively low extraction cost.

Paulo Andreazza, Diagem's chief geologist in Brazil, stated: "This new discovery, still in its early stages, is the culmination of decades of exploration by De Beers, Rio Tinto and, particularly, Diagem's successful "Broad-Front" Exploration Program".

Thirteen preliminary regional bulk samples totaling 235 cubic metres of the ash-fall kimberlitic layer have confirmed higher than normal diamond grades averaging 0.66 carats per cubic metre using a 1.7 millimetre diamond size cutoff (see Table 1). A total of 849 diamonds coarser than 1.7 millimetre weighing 155 carats have been recovered including a 4.67 carat diamond and 8 diamonds ranging between 1.20 and 1.34 carats. The layer averages 0.52 metre in thickness.

Dr. Mousseau Tremblay, a recognized diamond explorationist and Diagem's Qualified Person, visited the area in October 2006 and commented: "since the layer has suffered no apparent dilution or transport, this suggests that the grade of the layer should be equivalent to the grade of the potential source kimberlite pipe(s)".

In late November 2006, a limited program (74 line kilometres) of ground geophysics was commenced which has resulted in outlining 11 discrete electromagnetic geophysical targets which may represent single or multiple kimberlite pipes within a larger cluster of kimberlite pipes covering an area of 620 hectares. Preliminary field observations have since led to the identification of crater facies kimberlitic rocks at six separate anomalous sites. See Figures 1, 2 and 3 attached. Several of the targets have not yet been investigated. In some areas, it is becoming apparent that the tuff ring deposits peripheral to these kimberlite pipes are overlapping each other thus complicating the geological picture.

Pending the granting of the necessary permits, Diagem plans to further bulk sample the diamondiferous layer for delineation of additional resources amenable to surface mining methods. A program of surface mapping and trenching is contemplated to better define the kimberlite pipes on surface. Geophysical surveying will be extended beyond the limits of the current survey area on the regional elevated plateau and its flanks to investigate other areas where auger drilling has outlined a layer rich in kimberlite indicator minerals. Good correlation was found between the latter and the recent geophysical results.

The technical content of this news release has been approved by Dr. Mousseau Tremblay, of Williamstown, Ontario, a Qualified Person and Chairman of the Board of Directors of Diagem Inc.

Table 1: Bulk Sampling Results -- Diamondiferous Kimberlitic Ash-fall Layer



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Diamonds are greater or equal to 1.7 mm
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Diamonds
greater than
In situ 1 carat
Volume Diamonds Weight Grade -----------------
Bulk Samples (m3) Recovered (carats) (ct/m3) number carats
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---------------------------------------------------------------------
04 32.2 165 24.28 0.75 1 1.21
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06-TEST 5.5 32 6.89 1.25
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06 20.8 22 4.74 0.23
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07 8.57 7 0.97 0.11
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08 8.35 38 5.21 0.62
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09b 16.47 12 1.80 0.11
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10 5.35 35 6.59 1.23
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11 11.62 4 0.55 0.05
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12 15.68 6 1.87 0.12
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13 21.84 62 13.34 0.61 2 1.20
1.28
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1.22
1.30
14 51.36 243 42.3 0.82 4 1.34
1.04
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16 21.70 141 27.38 1.26
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4.67
17 15.17 82 19.06 1.26 2 1.10
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Total 234.61 849 154.95 9
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Average 0.182 0.66
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Maps are available at the following address: http://www.ccnmatthews.com/docs/DGM_PP.pdf

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