Brazilian Diamonds Limited

Brazilian Diamonds Limited

November 04, 2005 09:00 ET

Brazilian Diamonds Limited: Sale of Interest in Cata Preta Gold Project

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 4, 2005) - The Directors of Brazilian Diamonds Limited (TSX:BDY)(AIM:BDY) ("Brazilian Diamonds" or the "Company") announce that the Company has entered into an agreement with Hidefield Gold plc (AIM:HIF) a company with certain directors in common with Brazilian Diamonds, for the sale of Brazilian Diamonds' 50 percent interest in the Cata Preta Gold Project within the Quadrilateral Ferrifero gold district of Minas Gerais (the "Sale"). The licences cover over 2,000 hectares and are located 23 km northeast of the city of Ouro Preto. On completion, Hidefield will own a 100 percent interest in the licence areas.

The Acquisition is to be effected through Hidefield purchasing the whole of the share capital of Cata Preta Holdings Limited ("CPHL") which holds a 70 percent interest in Ouro Preto Mineracao Ltda ("OPML"), the company that holds the licences over the Cata Preta Gold Project. Hidefield will at the same time acquire the remaining 30 percent of OPML held directly by Brazilian Diamonds. Prior to the transaction Hidefield's 50 percent interest in the Cata Preta Gold Project was held in trust through CPHL.

In consideration for the acquisition Hidefield will issue 2.5 million new ordinary shares and grant to Brazilian Diamonds a 5 percent net profit interest on any future production from the joint venture licence areas. Brazilian Diamonds will also receive twenty percent of the net proceeds received by Hidefield through future joint ventures, leases, or outright sale of any of the mineral licences. On completion Brazilian Diamonds will hold 14,625,000 ordinary shares in Hidefield, representing 9.44 percent of the issued share capital. As announced on 26 January 2005, Brazilian Diamonds has granted options to two companies controlled by certain directors of Brazilian Diamonds entitling such companies to acquire up to 12,125,000 of the Brazilian Diamonds' Hidefield shares at a price of 6 pence each for a term expiring 25 January 2008.

Stephen Fabian, President of Brazilian Diamonds, said: "We have an excellent working relationship with Hidefield, and will continue to assist with managing their interests in Brazil.

"Brazilian Diamonds will retain an interest in future success through the net profit interest whilst continuing to focus on our diamond projects and initiatives."

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 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: 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: + 44-20 7794 1340
    Brazilian Diamonds Limited
    Kenneth P. Judge
    + 44 7733 001 002
    Brazilian Diamonds Limited
    Stephen Fabian
    President & CEO
    + 55 31 8814 5111