Brazilian Diamonds Limited

Brazilian Diamonds Limited

July 11, 2005 08:30 ET

Brazilian Diamonds' Update on Operations

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 11, 2005) - Brazilian Diamonds Ltd. ("Brazilian Diamonds or "the Company") (TSX:BDY)(AIM:BDY) is pleased to announce the following update on its operations:

Canastra 1 Site Works Licenses Approved

IBAMA, the Brazilian Federal Environmental Agency, has recently granted the Company an environmental license which will allow the upgrading of roads and the construction of four new bridges within the Canastra 1 property. The granting of this license will permit the Company to commence the first of a number of steps toward constructing a mine at the Canastra 1 kimberlite. While additional environmental licenses are required before actual mine construction can commence, the Company is encouraged that the issue of these long awaited licenses reflects a new and more constructive approach to the development of mines of economic importance to Brazil.

Bulk Sampling to Commence at Santo Antonio do Bonito Alluvial Project

The Company is pleased to announce that on behalf of the Santo Antonio alluvial joint venture, it has now received the required environmental licenses to permit commencement of bulk sampling test work at the Santo Antonio do Bonito alluvial project. A total of seven (7) licenses have now been issued by FEAM, the Minas Gerais State environmental agency. These licenses permit the excavation of alluvial material from four (4) bulk test sites and the construction of the bulk sampling plant.

Site work has now commenced and it is expected that construction of the bulk sampling plant will take approximately 45 working days. Excavation work at the first of the bulk sampling sites will commence in the coming weeks with a planned total of 32,000 m3 to be excavated in the first testing phase.

The Company expects bulk sampling to be completed by the end of 2005, to be followed by final feasibility study work. A decision to proceed with full-scale development of an alluvial diamond mine using a large-scale dredge and recovery unit owned by Mineracao Rio Novo Ltda, a division of Andrade Gutierrez, one of Brazil's largest civil engineering companies, will be made upon completion of this study. Construction of a full-scale alluvial mine has been estimated to take approximately 12 months to complete prior to the commencement of mining.

Update on Kimberlite Exploration at Santo Antonio

Evaluation of hard-rock targets within the headwaters of the Santo Antonio do Bonito River is well advanced with the Company planning to drill at least five (5) targets in the next three months. The targets have been prioritized on the basis of recently completed ground magnetic and electromagnetic (EM) surveys plus detailed stream sampling and geological mapping. The Company believes that these headwaters are the source of diamonds recovered from the five (5) kilometer stretch of the river where previously nine (9) gem quality diamonds, all over 300 carats in size, have been recovered by artisanal miners.

Drilling of Tucano 1 and Tucano 4 Kimberlites Completed

Drilling of the Tucano 1 and Tucano 4 kimberlite bodies has now been completed, and plans are underway to commence drilling of the Tucano 2 kimberlite.

Samples from the final drill cores recovered in the drilling of Tucano 4 have been assembled or have already been dispatched for analysis at the independent laboratory of Saskatchewan Research Council (SRC) located in Saskatchewan, Canada. Samples recovered from the Tucano 1 and 4 drilling program will be analyzed using caustic fusion testing at the SRC laboratory, after which the Company will announce its evaluation of those results.

De Beers Maravilha Data Set Acquisition Completed:

The acquisition of the Company's CAN$300,000 purchase from De Beers Group of an extensive database of diamond exploration information on central Minas Gerais, Brazil and covering an area of approximately 6,400 hectares, has now been completed with the payment of CAN$50,000 in cash and the issue of 450,000 Brazilian Diamonds ordinary shares. Completion of this transaction through the issue of these shares at a price of CAN$0.55 per share, lifted De Beers' shareholding in the Company to 3.3% with additional warrants issued in connection with earlier data set acquisitions, giving De Beers the right to acquire up to another 1.9% of the Company at prices between CAN$1.25 and CAN$2.00 per share.

The area covered by this database includes the Maravilha 3 diamondiferous kimberlite and is thought to have the potential to host additional diamond discoveries. This data complements the already significant databases Brazilian Diamonds has assembled in the area as part of a strategy to identify high priority diamond exploration targets in Brazil. These databases have already enabled Brazilian Diamonds to accelerate its exploration efforts in areas already identified as having significant potential for further kimberlite discoveries and assisted in the identification of the Tucano kimberlites as being prospectively diamondiferous. Drilling of the Tucano 1 kimberlite subsequently confirmed this first drill target to be diamondiferous.

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: 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 Santo Antonio alluvials 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 Ltd.
    Investor Relations
    North America: 1-877-689-2599 or London: + 44-207-794-13
    Brazilian Diamonds Ltd.
    Kenneth P. Judge
    + 44-7733 001 002
    Brazilian Diamonds Ltd.
    Stephen Fabian
    President & CEO
    + 55-31-8814 5111