Mon Sep 20, 2004
Brazilian Diamonds Acquires De Beers Database
De Beers Becomes Substantial Shareholder in Brazilian Diamonds
Brazilian Diamonds Ltd. is pleased to announce that it has acquired from the De Beers Group their entire diamond exploration database covering the Serra da Canastra region of Brazil. As a consequence of this transaction and two further transactions agreed in principle and currently in documentation, De Beers will become a substantial shareholder in Brazilian Diamonds.
The Serra da Canastra database covers approximately 460,000 hectares within the Serra da Canastra region, centred around the Brazilian Diamonds' diamondiferous Canastra 1 kimberlite. This area has significant potential for additional diamond discoveries and Brazilian Diamonds is confident that the acquisition of these data will greatly advance the timeline and reduce the overall cost for its exploration efforts in the region.
The Serra da Canastra database represents the accumulated results of more than 30 years of exploration by De Beers in the area. Included within the data set are 21,000 indicator mineral samples, 71,000 microprobe chemical analyses, and 19,000 line kilometres of proprietary airborne geophysics covering the entire region. De Beers is also providing details about 35 known kimberlite occurrences and the results of ground geophysics within the region.
The physical samples to which Brazilian Diamonds is being given access will be selectively re-analysed using advanced modern techniques, including trace element determinations by proton or laser ablation microprobe, and radiometric dating, which should significantly enhance target evaluations.
These data complements an already significant database Brazilian Diamonds previously acquired as a result of purchasing De Beers' Brazilian subsidiary Mineração do Sul in August 2002. That acquisition also included 40,000 hectares of mineral claims in the area and the Canastra 1 kimberlite for which licenses are being sought to commence trial mining.
To acquire the expanded Serra da Canastra database, Brazilian Diamonds will pay the De Beers Group a consideration of Cdn$2 million comprising Cdn$400,000 in cash and 2.2 million Brazilian Diamonds shares at a price of Cdn$0.73 per share. Brazilian Diamonds will also issue De Beers 2 million warrants to acquire further shares in the Company at any time in the next three years at prices of Cdn$1.25, Cdn$1.50, Cdn$1.75, and Cdn$2.00 for each block of 500,000 warrants. The transaction does not involve any "back in" rights, royalties or other financial commitments.
Acquiring this valuable and unique database will enable Brazilian Diamonds to accelerate its exploration efforts in an area in which the Company has already identified high potential for further kimberlite discoveries.
This Serra da Canastra database will advance the Company's strategy of economically acquiring and exploiting large data sets to find high priority diamond exploration targets in Brazil.
Previously acquired databases include the smaller De Beers dataset acquired with the Mineração do Sul purchase in 2003, data and licenses covering the Santo Antonio do Bonito drainage acquired through the purchase of Cobre Sul from South Atlantic Resources in 2002 and data and licenses in the Abaeté drainage acquired with the purchase of Canabrava's subsidiary Parima in 2003. The data set for the Abaeté drainage includes data accumulated by Teck Cominco and Canabrava over more than 10 years of exploration activity.
Brazilian Diamonds estimates that the replacement cost of the basic elements of these data sets would be considerably more than Cdn$15 million but more importantly, to generate and assemble the information in these data sets would require at least 5 to 10 years of intensive and expensive exploration activity.
Brazilian Diamonds anticipates that the Serra da Canastra dataset acquisition will be followed by two further dataset purchases from De Beers. Those datasets cover substantial areas of the Santo Antonio do Bonito and Abaeté drainages which are of significant interest to Brazilian Diamonds. It is expected that these further acquisitions will be completed shortly.
Brazilian Diamonds' experience in analysing and re-analysing data acquired with the purchase of Mineração do Sul demonstrates that the De Beers' exploration data meet or exceed the highest industry standards and should greatly assist our efforts to locate diamondiferous kimberlites.
Ken Judge, the Chairman of Brazilian Diamonds commenting on these transactions said:-
"Through the lengthy negotiations which concluded in our purchase of Mineração do Sul, we established a relationship with De Beers which has today made possible this first of three further transactions. Our efforts to establish a significant exploration presence and highly qualified technical team based in Minas Gerais, Brazil, including the acquisition and upgrading of our diamond laboratory in Patos de Minas, demonstrate that we are committed to high quality diamond exploration and the initial results of those efforts in and around the Canastra region have been shared with De Beers.
These further dataset acquisitions have given us access to extensive, high quality data from the acknowledged leaders in the diamond industry and we will now begin reprocessing the data and samples using the latest available technologies to add to and develop our existing data sets and geological models. We firmly believe that this strategy can lead us to important diamond discoveries in Brazil and with it, the prospect of becoming Brazil's first kimberlite diamond miner."
Bill McKechnie, De Beers Group Director of Exploration added:-
"This transaction represents the cementing of a relationship between De Beers and Brazilian Diamonds. We originally sold our Canastra region licenses and the Canastra 1 kimberlite to Brazilian Diamonds a few years ago and have remained in close touch since then regarding further business opportunities. Through this deal we are extending Brazilian Diamonds' portfolio of exploration data in the Canastra region, widening their prospects of further discovery." |
