March 30, 2007 16:38 ET

Great Western Diamonds Closes Acquisition in Brazil

SASKATOON, SASKATCHEWAN--(CCNMatthews - March 30, 2007) - Great Western Diamonds Corp. ("GWD") (TSX VENTURE:GWD) is pleased to announce that it has closed the arm's length transaction announced January 22, 2007 to acquire a diamond exploration property in Brazil from Zoneplan Limited ("Zoneplan"), a Cyprus company and a wholly owned subsidiary of Santa Elina Mines Corporation ("Santa Elina") of Road Town, Tortola, British Virgin Islands, acting through its Cyprus branch. The property, which is approximately 830,000 hectares, is known as the Rondonia Diamond Project, and is located near the city of Ariquemes in the state of Rondonia, in the west central region of Brazil. GWD is buying a 100% interest, subject to a 2% Gross Overriding Royalty, by purchasing all of the shares of a subsidiary of Zoneplan located in the British Virgin Islands, Oleander Financial Inc. ("Oleander"), which holds the property through a Brazilian subsidiary, in accordance with Brazilian law. The audited consolidated financial statements of Oleander Financial Inc. dated January 31, 2007 together with the subsequent review statements to March 9, 2007 show deferred expenses and mineral claims of US$296,396 and cash assets of US$1,643. Oleander has no other assets or liabilities as at March 9, 2007.

The purchase price of $13,335,000 was paid by the issuance of 29,633,333 common shares ("Shares") of GWD at a deemed price of $0.45 per share and 14,111,111 common share purchase warrants ("Warrants"); each Warrant will be exercisable for the purchase of one share at a price of $0.60 for 24 months following closing. Closing is conditional on shareholder and TSXV approval. The purchase price for the property was negotiated at arm's length.

GWD was advised in this transaction by Wellington West Capital Markets Inc. ("WWCM"). WWCM's advisory fee will comprise $250,000 cash compensation and 2.0 million warrants to acquire common shares exercisable at $0.45 per share for 24 months following closing, subject to TSXV and other regulatory approval.

Concurrent with the purchase of the property in Brazil, GWD has closed a private placement of units to Peter Marrone of Toronto, Ontario, Zoneplan (the Cyprus based subsidiary of Santa Elina from which the shares of Oleander were purchased), Vaaldiam Resources Limited, and others for CDN$2,567,500.65, also conditional on shareholder and final TSXV approval. The units, priced at $0.45, consist of one common share and one-half share purchase warrant, each whole warrant being exercisable for one common share at $0.60 for two years from the date of closing.

In connection with the private placement, GWD is also paying a finder's fee to WWCM comprised of $128,375 cash compensation and 285,278 warrants to acquire units, exercisable at $0.45, each unit consisting of one common share and one-half share purchase warrant, each whole warrant exercisable at $0.60 for two years from the date of closing.

All securities issued in connection with these transactions are subject to a hold period that expires July 31, 2007.

GWD's largest shareholder, Great Western Minerals Group Ltd., has stated that it is in favour of the transaction, subject to satisfaction of the conditions.

Prior prospecting work on the Rondonia Diamond Project conducted by De Beers some 30 years ago revealed 12 kimberlites in three separate clusters. Additional exploration work recently completed by BHP Billiton under an earn-in agreement with Santa Elina included ground and airborne magnetic surveys as well as hand dug pits and auger drilling to acquire small samples for diamond recoveries. This work resulted in discovery of two more kimberlite bodies and a number of exploration leads to new kimberlites. BHP decided to withdraw from the project less than a year after commencing, and prior to review of diamond recovery, for a variety of reasons including internal competition for funds by other promising projects globally and that the size of the known kimberlites did not meet their initial threshold requirements.

Onsite due diligence and review of local and regional diamond exploration by GWD and William E. Roscoe Ph.D., P.Eng. of Scott Wilson Roscoe Postle Associates Inc. showed positive indicators of economic potential for the diamond-bearing kimberlite clusters on the Rondonia property, and that there exists significant potential for delineation of new kimberlites. Dr. Roscoe recently completed a National Instrument 43-101 compliant technical report on the property dated February 16, 2007, and relevant excerpts from the Executive Summary are presented as follows:

"Based on the exploration work carried out in 2006 by BHP Billiton, there is excellent potential for discovery of more kimberlites on the Rondonia Diamond Project in the opinion of Scott Wilson RPA. We offer the following observations and conclusions.

- Exploration in 2006 by BHP Billiton has confirmed eight kimberlite localities on the Rondonia Diamond Project area. The presence of diamonds has been established on five of the eight kimberlites which were sampled for micro diamonds in 2006.

- Eighteen micro diamonds are reported from a 148 kg sample from the Cujubim 4A kimberlite, 22 micros are reported from a 140 kg sample from the Cujubim 3 kimberlite, 9 micros are reported from 163 kg sample from the Cujubim 4 kimberlite, 18 micros are reported from a 148 kg sample from the Cujubim 4A kimberlite, and 12 micros are reported from a 128 kg sample from the Retiro 4 kimberlite. While these results are not high by Canadian standards, micro diamond count are reported to be similarly low for kimberlites on the Pimenta Bueno Project of Vaaldiam and Rio Tinto some 200 kms east of Rondonia Project. (Microdiamond extraction, selection, and description were conducted by SGS Minerals Services of Lakefield, Ontario, Canada under accreditation by the Standards Council of Canada to the ISO/IEC Guide 25 standard for specific registered tests. Diamond extraction was performed utilizing standard caustic dissolution techniques down to a lower cutoff of 105 microns with appropriate quality assessment and quality control measures implemented to evaluate the efficiency of the caustic dissolution processing technique.)

- The Rondonia Diamond Project is at an early stage of exploration. The property area is vast at 830,000 ha (8,300 km2) and little exploration has been done.

- Stream sediment sampling by BHP Billiton has been very effective in relocating the kimberlites found by De Beers. There are an additional five samples anomalous in kimberlite indicator minerals that have not been followed up yet on the property.

- In addition to the stream sediment samples analyzed, BHP Billiton took another 40 samples from the property areas that have not been analyzed. Processing of these samples should be a priority.

- GWD note that, overall, the mineral chemistry information supports the concept of two different kimberlite types that may correspond to different ages of kimberlite emplacement and occurrence of a diamond-bearing kimberlite phase in some pipes and a potentially barren kimberlite phase in others. This supposition is borne out by the observation that diamond has been recovered from five of the eight kimberlite pipes sampled on the Rondonia property.

- The 2006 BHP Billiton airborne magnetic survey covered approximately two thirds of the western part of the Rondonia Diamond Project area and none of the eastern cpart of the property area. Only the first pass interpretation of the survey has been carried out. There is scope for more interpretation of the aeromagnetic survey results especially in combination with the stream sediment KIM results. There is also scope to cover other parts of the Rondonia Project area, in particular the northern one third of the western part of the property where the Retiro Kimberlite cluster is located.

- BHP Billiton followed up 30 priority aeromagnetic targets in the field and explained 28 of them as caused by magnetic gneisses, and access was refused to examine one. Follow up auger drilling is needed for aeromagnetic anomaly MA-04 which is on trend with Cujubim 1 Kimberlite and contains ilmenite in soils. It is located about 500 m SSE of the Cujubim Kimberlite.

- The Rondonia Diamond Project has a number of similarities to the Pimenta Bueno Project of Vaaldiam and Rio Tinto where bulk sampling of several kimberlite pipes is in progress.

- In the opinion of Scott Wilson RPA, the Rondonia Diamond Project has sufficient merit to justify the recommended program and budget.


Scott Wilson RPA recommends a two phase program of exploration and evaluation on the Rondonia Diamond Project. The program is a continuation of the 2006 BHP Billiton exploration program. The recommended Phase 1 and Phase 2 exploration and evaluation programs are described in more detail below. The second phase is contingent on results of the first phase. The estimated total budget for phase 1 and 2 is C$4.85 Million.

The phase 1 exploration program includes the following activities and has an estimated budget of C$1.5 million.

- Relocate the BHP Billiton and De Beers kimberlites in the field and carry out additional prospecting in the area.

- Follow up 2006 stream sediment anomalies by prospecting and auger or pit sampling of targets for mineral chemistry and micro diamonds.

- Analyze for kimberlite indicator minerals the unprocessed 2006 stream sediment samples taken on the Rondonia property by BHP Billiton.

- Extend the stream sediment sampling to other parts of the property with little or no coverage.

- Auger drilling of magnetic anomaly MA-04 near Cujubim 1 for mineral chemistry and micro diamond samples.

- Reinterpret the 2006 BHP Billiton aeromagnetic survey.

- Follow up aeromagnetic anomalies and stream sediment anomalies with prospecting ad sampling for mineral chemistry and micro diamonds

- Extend aeromagnetic survey to the northern part of the western block (where the Retiro kimberlite cluster is located).

The phase 2 exploration and evaluation program includes the following activities and has an estimated budget of C$3.25 million.

- Evaluation of known and new kimberlites with significant micro diamond counts by collecting and processing of mini bulk samples and core drilling to determine kimberlite geometry.

- Extend aeromagnetic survey to the east block of the property.

- Follow up anomalies resulting from the extension of the aeromagnetic survey by prospecting and sampling for mineral chemistry and micro diamonds."

Brent Jellicoe, President & CEO of GWD was quoted as saying: "The observations and conclusions from the Scott Wilson RPA report support our high level of confidence in the diamond potential of this property area. The company will move forward to rapidly set up an exploration office in Brazil with hiring of appropriate in-country staff and initiation of liaison with government agencies and the exploration service industry. GWD intends to implement an aggressive evaluation program focused on evaluation of the known diamond-bearing kimberlites as well as prospecting around the high-priority indicator mineral anomalies. Concurrent with the evaluation efforts will be a broad indicator mineral reconnaissance over the entire property followed by planning for a combined airborne magnetic and EM geophysical survey over the northwest bock of land."

The Company affirms that approximately CDN$850,000 of the Phase 1 budget is dedicated to land fees and General & Administrative costs associated with initiating a Brazilian exploration office. Furthermore, approximately CDN$900,000 of the Phase 2 budget will be directed to primarily land fees and a lesser amount to General & Administrative costs associated with operating a Brazilian exploration company.

Jellicoe concluded, "Expansion into Brazil represents serious growth for GWD. We anticipate a corresponding increase of shareholder value based on strong indications of diamond potential from a diverse portfolio of projects at various stages, strong technical ability, and solid upper management experience."

Brent C. Jellicoe, P.Geo. is a Professional Geoscientist in the Province of Saskatchewan and is the Company's Qualified Person responsible for the verification and quality assurance of analytical results and review of external reports. Mr. Jellicoe confirms that he has reviewed and approves of the contents of this news release.

Great Western Diamonds Corp. is an exploration and mine development company currently focused on several diamond prospects including the 100%-owned Candle Lake Diamond Project in central Saskatchewan. GWD is committed to increasing shareholder value through aggressive, results-driven exploration. While Candle Lake is the core diamond project, the Company continues to build a balanced and geographically diverse project portfolio with both local and international diamond properties.

Inquiries by direct mail should be addressed to Great Western Diamonds Corp., 226 Cardinal Crescent, Saskatoon, SK S7L 6H8.

CUSIP No: 391418

(The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.)

Contact Information

  • Great Western Diamonds Corp.
    Brent Jellicoe
    President & CEO
    (306) 668-0701
    Great Western Diamonds Corp.
    Doug Patrick
    Manager of Investor Relations
    (306) 961-2785