Brazilian Diamonds Limited

Brazilian Diamonds Limited

September 30, 2005 09:45 ET

Brazilian Diamonds Limited: New Gold Mineralization in Drilling at Cata Preta; New Licences in Cata Preta Joint Venture

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Sept. 30, 2005) - Brazilian Diamonds Limited (TSX:BDY)(AIM:BDY) is pleased to announce that it has received encouraging news from its joint venture partner, Hidefield Gold plc, on the Cata Preta Gold Project in Minas Gerais, Brazil. Below is the text of an announcement released by Hidefield Gold plc today regarding this project and has been prepared under the supervision of John Prochnau as a Qualified Person for this project. The laboratory used for the analysis is Lakefield Geosol Laboratorios Ltda in Belo Horizonte, Brazil:

The Directors of Hidefield Gold plc ("Hidefield" or the "Company") are pleased to report progress on the Company's exploration programmes at Cata Preta and Sumidouro Dome, near the historic gold mining centre of Ouro Preto in Minas Gerais, Brazil, and announce new licence acquisitions in both project areas.

Cata Preta Project Drilling Update

At Cata Preta, the Company has completed a short drilling programme consisting of five holes totaling 506 metres to test the north extension of the "Carvoeira" gold deposit and areas of potential new mineralization under historic mining pits to the south. Two holes at the north end of the "Carvoeira" deposit confirmed continuity of gold mineralization in this open strike direction, but the intervals are thin.

CP332, the last hole in the programme, intercepted 3.0 metres grading 10.07 grammes per tonne gold at a depth of only 27 metres below the central pit about 1 km south of the "Carvoeira" deposit. An earlier hole through this zone, about 75 metres below CP 332, intercepted 2.3 metres averaging 4.42 gpt gold suggesting potential for a new gold deposit in this area.

Following is a summary of the drill results:

Interval Thickness Grade
Drill Hole Depth (metres) (metres) (gpt gold) Target
---------- ----- ----------- -------------- -------- -----------

CP 328 130 No South Pit
CP329 68 No South Pit
CP330 111 99.1-100.8 1.7 4.95 North
CP331 131 122.9-123.6 0.7 12.82 North
CP332 66 24.6-30.3 5.7 5.18 Central Pit
27.3-30.3 3.0 10.17
42.4-49.9 7.5 1.29

Cata Preta Scoping Study

The Company commissioned Geoexplore Consultoria e Servicios of Belo Horizonte, to undertake an Economic Scoping Study to assess the potential viability of a small scale mining operation on the "Carvoeira" gold deposit. This Scoping Study confirmed that the development of a small underground mine and gravity plant would be marginally profitable at a gold price of $400 per ounce. The Company will be reviewing this option in the context of the opportunity to undertake further exploration on the contiguous licence recently acquired and referred to below.

Acquisition of New Licences

The Directors are also pleased to announce the acquisition of a new exploration licence, totaling 2,983 hectares, contiguous with the Cata Preta project licences and located immediately west and north of those licences. A 100 percent interest is being acquired from Brazminco Ltda., a privately held company based in Belo Horizonte, for US$80,000 upon formal assignment of the licence to Ouro Preto Mineracao Ltda. ("OPML"), Hidefield's joint venture operating company in Brazil, and further payments of US$50,000 and US$175,000 respectively in event of positive feasibility and commercial production. The licence was actively sought in recent bid competition by CVRD and AngloGold Ashanti, as well as OPML, before award to Brazminco on a legal technicality.

The new licence at Cata Preta covers both the potential northeast extension of the "Carvoeira" gold deposit and westerly dip projections of largely unexplored, gold-bearing quartz veins exposed in outcrop and shallow mine workings along the west boundary of the property and is considered very important to efficient development of the project. This vein mineralization has had limited exploration work in the past, but is informally reported to have produced ten tonnes (about 300,000 ounces) gold in the late 19th century. Two early drill holes intercepted multiple mineralized veins with reported values of 7.2 gpt gold over 4.55 metres, and 21.26 gpt gold over 0.5 metres, up to 140 metres below the historic workings.

Sumidouro Dome Project Drilling Update

The Company's recently completed drill programme at its Sumidouro Dome project, located 25 km south of Cata Preta and immediately east of the former Passagem gold mine (two million ounces past production), included ten holes totaling 755 metres under two of the numerous historic gold pits on the property. The drilling confirmed southeast plunging mineralized lodes with results including 4.0 metres at 2.13 gpt gold and 1.0 metre grading 10.59 gpt gold. Prospecting activities at Sumidouro Dome have continued to focus on areas of historic mining where conventional rock sampling and panning have identified a number of promising new exploration targets.

The Company has also increased its property position at Sumidouro Dome through acquisition of two additional exploration licences, totaling 6,402 hectares adjacent to and, immediately south of its existing property. The licences, also acquired from Brazminco Ltda., have been purchased outright for a cash payment of US$30,000 upon formal assignment to OPML and further payments of US$20,000 per licence upon positive feasibility and US$100,000 upon commercial production. The new licences contain a number of historic mining pits on and around which extensive gold mineralization has been identified in rock samples and pan concentrates.

Hidefield has a 50 percent interest and is operating the Cata Preta and Sumidouro Dome projects in joint venture with Brazilian Diamonds Limited which holds an approximate 8% percent shareholding in the Hidefield. Under terms of the joint venture, the Hidefielld may ultimately increase its interest to 80 percent through a combination of exploration expenditures and further share issues.

Editors' Note:

Brazilian Diamonds is a leading Brazil-based exploration company focussed 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 has a fully operational diamond 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, almost all of whom are located at the Company's facilities in Brazil and this includes 5 full time geologists.

The Company's strategy for non-core activities on its properties is to form joint ventures: it has a gold exploration joint venture with Hidefield Gold PLC and 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 the country's largest civil engineering firms and an existing large scale, dredge based producer of alluvial diamonds.

Contact Information

  • Brazilian Diamonds Limited
    Investor Relations
    North America: 1-877-689-2599 or London: + 44-207-794-1340
    Brazilian Diamonds Limited
    Kenneth P. Judge
    + 44-7733 001 002
    Brazilian Diamonds Limited
    Stephen Fabian
    President & CEO
    + 55-31- 8814 5111