Diagem Inc.

Diagem Inc.

December 13, 2006 09:44 ET

Diagem Initiates Mini Bulk Sampling of New Diamond Discovery

MONTREAL, QUEBEC--(CCNMatthews - Dec. 13, 2006) - Diagem Inc. ("Diagem" or "the Company") (TSX VENTURE:DGM) is pleased to announce that it has begun processing mini-bulk samples of the diamondiferous layer recently discovered by artisanal miners on the Company's Property 370/98, located approximately 40 kilometres west of the city of Juina in Mato Grosso, Brazil. The artisanal miners working on a small 30-hectare block provided to them by Diagem within the 7,646 hectare exploration permit are reporting a grade of 2.0 carats per cubic metre and production of 10,000 carats per month from the approximately one-metre thick gravel-like layer. A newly commissioned 10 cubic metre per hour moveable plant will be used to concentrate the material. Paulo Andreazza, Diagem's chief geologist, is planning to accelerate the program by bringing in a second moveable plant.

The bulk sampling will allow Diagem to verify the reported grades on Diagem's exploration licence where the ongoing program of soil sampling, auger drilling and trenching has traced the unit several kilometres beyond the limits of the artisanal miners' workings. At least 12 pit samples with a volume of approximately 50 cubic metres each are planned to be processed before year end when the final exploration report on the property is due.

The diamondiferous unit has unique physical characteristics suggesting it was formed in situ as an ash fall from a nearby kimberlite eruption. There is no evidence of concentration occurring after the initial eruption suggesting that the source kimberlite should have a grade of heavy minerals and diamonds similar to the grade which is reported as being 2.0 carats per cubic metre.

The area covered by this diamondiferous layer can be inferred from the distribution of the material away from the eruptive center, a radius of 2.0 to 4.0 kilometres, as being approximately 400 to 800 hectares. This assessment, while still under verification, underlines the excellent economic potential for the target area.

A ground magnetometer and electromagnetic survey that will be used to identify the potential kimberlite source of the ash fall is nearing completion. Several targets have been already been outlined from the preliminary results and are being investigated.

The technical content of this news release has been approved by Denis Francoeur, M.Sc., P.Geo., a Qualified Person (APGO member 0781) and Chief Executive Officer of Diagem.

WARNING: The statements made in this news release may contain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from expectations and projections set out herein.


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