More press here too. Great PR from Brazil with Canabrava. Keep in mind this area of Brazil has a lot of alluvial gravels full of diamonds (with big diamonds,...lots of fancies) as well as hundreds of kimberlite targets ready to be explored and drilled. Southern Era will market the diamonds too,....interesting!!!!!
Canabrava signs $20-million (U.S.) Brazilian joint venture with
SouthernEra
Canabrava Diamond Corp CNB
Shares issued 28,293,888 Apr 28 close $1.10
Thu 29 Apr 99 Company Sponsored
Natural Resource Investor
CANABRAVA DIAMOND CORPORATION (VSE:CNB)
Wed 28 Apr 99
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Following is NRI Fax Alert, issued after market on Wednesday, April 14,
1999.
NATURAL RESOURCE INVESTOR
& WORLD GOLD STOCK REPORT
/ / / FAX ALERT #9, Vol. 1999 / / /
(company-sponsored investor relations report)
CANABRAVA DIAMOND CORPORATION (VSE:CNB)
DIAMOND-FINDER SOUTHERN ERA RESOURCES
SIGNS $US20-MILLION J-V WITH CANABRAVA
TO EXPLORE CNB'S BRAZILIAN DIAMOND PROPERTIES
SouthernEra to Initially Focus on Testing and Drilling
Kimberlite and Lamproite Pipes Already Discovered by CNB
on Brazilian Concessions
With Recent $C25-Million Kennecott J-V
Also Signed on its Ontario Diamond Projects,
Canabrava Emerges as Prominent Global Diamond Explorer
FAX HOTLINE FOR MARKET HOURS 4/15/99
Canabrava Diamond Corporation (VSE:CNB) has suddenly vaulted to the head of
the class as an important Western Hemisphere diamond exploration junior. It
now deserves to be seriously followed by institutional and other investors
with an interest in this sector. Here's why:
In just the last three weeks, Canabrava has signed three significant
joint-ventures to explore its valuable and far-flung diamond concessions in
Canada and Brazil.
* Most recently, a week ago, CNB announced that proven diamond-finder
SouthernEra (discoveries in Canada and Southern Africa) signed a deal
to explore the company's 480,000 hectares of diamond properties in
Brazil. Under the terms of the agreement, SouthernEra must spend a
total of $US20-million over 7 years to earn a 50% interest in the
overall project. A total of $US1.5-million must be spent in the first
24 months.
* Late last month, Canabrava announced that Kennecott Canada Exploration
Inc. signed a $C25-million j-v with CNB and Paramount Ventures to
explore CNB's 200,000 hectares of diamond properties in Ontario, near
Wawa. Kennecott can earn a 60% interest in the project by spending the
above amount or advancing to a mine construction decision, whichever
occurs first. Under the agreement, Kennecott must spend the first
$C1.5-million within 18 months.
* At nearly the same time as the Kennecott news, CNB also announced a
new j-v with Paramount to start production on a large alluvial deposit
in Brazil. This is expected to generate sizeable on-going cash flows
to the company. Paramount will spend $US1-million to earn a 50%
interest in the project.
The SouthernEra J-V:
The j-v with SouthernEra compels strong attention because CNB has already
identified more than 100 kimberlite and lamproite, potentially
diamond-bearing pipes, on its 480,000 hectares of concessions in Brazil.
The Canabrava project is located on the southwestern margin of the Sao
Francisco Craton within the Upper Cretaceous Alto-Paranaiba Igneous
Province. This is one of the largest alkaline igneous provinces in the
world. Kimberlites and lamproites, both of which can host economic amounts
of diamonds, fit within this category of alkaline igneous rocks. The region
is well known for its production of large, high quality gem diamonds. More
than 50 diamonds weighing between 100 and 726 carats have been reported
from the area. Brazil was the world's major diamond producer prior to the
discovery of diamonds in South Africa.
Exploration work on the project is well advanced and includes extensive
airborne and ground geophysical surveys, geochemical sampling and drilling.
This work has been successful in locating more than 100 kimberlite and
lamproite pipes. Only eight of these pipes have been tested for
micro-diamonds. Of these, three returned positive counts. In addition, more
than 500 geophysical and/or geochemical targets remain to be tested. Work
completed by Canabrava over the past six months has identified a number of
targets with excellent mineral chemistry. These targets will be the
immediate focus of the joint venture exploration program.
As mentioned, under the terms of the Agreement, SouthernEra can earn a 50%
interest in the project by spending a total of $US20-milion over 7 years. A
firm commitment of $US1.5-million must be spent within the first 24 months
of the agreement. SouthernEra will have an option to reduce the
$US20-million earn-in obligation to $US15-million by subscribing for a
private placement for $US1-million worth of Canabrava shares (at the then
current market price) on or before December 10, 1999.
Once SouthernEra has earned its 50% interest, exploration expenditures will
be made by the parties on a pro-rata basis. When the management committee
determines that a feasibility is warranted within a designated part of the
project or where an aggregate of $US20-million has been incurred by the
joint-venture, SouthernEra will have the right to earn a 60% interest in
each Specific Project Joint Venture by funding 100% of the cost of
feasibility. SouthernEra will, furthermore, have the right to increase its
interest to 70% by assuming 100% of the construction costs to commercial
production. SouthernEra will recover the construction costs out of 90% of
net operating cash flow. A one-time cash payment of $US5-million will be
paid to Canabrava within a time period of less than five years following
commencement of commercial production on any specific discovery.
In addition to the primary diamond targets, the Canabrava project
properties host a number of potentially significant alluvial diamond
deposits which have and still are producing both large and high quality,
fancy, colored diamonds of considerable value. The fancies include pink,
blue green and cognac colored diamonds. SouthernEra will have the right to
dedicate up to 20% of its earn-in commitment to explore and develop the
secondary alluvial diamond deposits on the Canabrava project. During the
earn-in period, SoutherEra will be entitled to 50% of the net operating
cash flow from the property. When SouthernEra earns a 60% interest in any
property, SouthernEra's interest in the alluvial diamonds will be further
increased to 60%. SouthernEra's interest will be further increased to 70%
with the commencement of commercial production of a primary diamond mine.
(A color photograph of recent production of fancy diamonds will be posted
shortly on SouthernEra's web site.)
The Kennecott J-V
Canabrava was also able to accomplish with considerable success in Canada
the goal of defining numerous targets that look quite promising for the
discovery of diamondiferous kimberlite pipes. These exploration programs
are on the Whitefish Lake Project, 100% owned by the company, and on the
KAP and Rocky Island Lake Projects, 50% owned by CNB and 50% by Paramount
Ventures and Finance Inc. The areas include more than 200,000 hectares of
staked and leased lands, and are located northeast of Wawa, Ontario.
Under the terms of the Kennecott Letter Agreement, Kennecott will have the
exclusive right to acquire a 60% interest on all of the Canabrava and
Canabrava/Paramount Ontario properties above by spending $C25-million
within seven years, or by advancing the project to a decision to begin
development and construction of a mine, whichever occurs first. Kennecott
must also commit to a minimum exploration expenditure totaling
$C1.5-million within eighteen months of executing the Option Agreement.
Once Kennecott has earned its 60% interest, the parties will form a joint
venture and fund ongoing exploration/development programs on a pro-rata
basis. Kennecott will be the operator. The terms outlined in the Letter
Agreement are subject to the completion of a formal Option Agreement, plus
management and regulatory approvals.
The Paramount J-V
Lastly, CNB and Paramount also signed a joint venture agreement late in
March to develop alluvial diamond deposits on Canabrava's 100% owned Rio do
Sono Property, Brazil. The Rio do Sono alluvial diamond property is
comprised of approximately 15,000 hectares of exploration concessions
located near the town of Paredao do Minas, 300 kilometres south of Brasilia
in the State of Minas Gerais.
Under the terms of the Agreement, Paramount will spend $US1 million to earn
a 50% interest in the Rio do Sono Project. Once Paramount has earned a 50%
interest, the joint venture will fund ongoing costs on a pro-rata basis.
The joint venture has engaged the services of Baines & Co. to be the
Project Manager. Baines & Co. have successfully run alluvial diamond
operations in Sierra Leone, Angola and in the Central African Republic.
Upon recovery of alluvial diamonds from the Rio do Sono Project, net
operating profits will be shared initially as to 45% Canabrava, 45%
Paramount and 10% Baines & Co. When Paramount receives the equivalent of
$US1 million from its 45% share of net operating profits, the distribution
will thereafter be 50% Canabrava, 40% Paramount and 10% Baines & Co.
Canabrava will be the operator and have the right to market the diamonds.
Outlook
Canabrava Diamond Corporation (VSE:CNB) has made a name for itself with
extremely well-conceived Canadian diamond exploration programs, under the
direction of its president, Dr. Rory O. Moore, who formerly managed highly
successful programs at Diamet and BHP.
In our view, with three significant new joint-ventures now set to power up
big steps forward in exploration of its attractive properties, CNB deserves
to be followed closely from this point onwards for the potential of
breakout developments. CNB closed on Tuesday, April 13, at $CDN 1.00/share.
Canabrava is 59.6% owned by cash-rich Southwestern Gold Corporation
(TSE:SWG), which has about 25 major joint ventures with companies like
Newmont, Pan American and others in Peru, Chile and China.
NRI/WGSR
_______________________
For immediate corporate information, call Canabrava Diamond Corporation at
604-669-2525. A US broker knowledgeable in diamond exploration companies is
Rick Rule at 800-477-7853.
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Copyright (c) 1999 NRI/WGSR
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