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Non-Tech : Brazilian Diamonds Ltd (BDY.TO) -- Ignore unavailable to you. Want to Upgrade?

To: Dale Kohler who wrote (1)	4/3/2004 10:40:55 PM
From: Dale Kohler	Read Replies (1) \| Respond to of 14

Brazilian Diamonds Limited - Santo Antonio Joint Venture Agreement Signed Wednesday February 11, 8:30 am ET Feasibility Study Secures Initial Cdn$800,000 Investment from JV Partners VANCOUVER, Feb. 11 /CNW/ - Brazilian Diamonds Limited ("BDY") is pleased to announce that an agreement has been reached with two of Brazil's foremost mining/development companies to form a joint venture to investigate the potential for commercial exploitation of the company's large alluvial diamond deposits within the Santo Antonio do Bonito Valley license portfolio. ADVERTISEMENT Companhia Mineradora de Minas Gerais ("COMIG" www.comig.com) and Mineraçao Rio Novo Ltda ("MRN"), a wholly owned subsidiary of Andrade Gutierrez SA, www.andradegutierrez.com have agreed to form a joint venture with SAMSUL Mineraçao Ltda and Cobre Sul Mineraçao Ltda, both of which are wholly owned subsidiaries of Brazilian Diamonds, with the intention of undertaking large scale mining operations on the Company's substantial alluvial diamond deposits along the Santo Antonio do Bonito River in Minas Gerais, Brazil. COMIG is a Minas Gerais State Government-controlled entity with revenues of approximately R$300m p.a. (US$100m) largely derived from royalties held over mineral licences for niobium (CBMM based at Araxa in Minas Gerais is the world's largest producer of niobium) and natural mineral water. COMIG was founded in 1990 with the objective of advancing the exploration and exploitation of mineral resources in Minas Gerais state. MRN is the wholly owned alluvial diamond mining division of Andrade Gutierrez, one of Brazil's largest civil engineering firms with annual revenues of approximately R$3 billion (US$1.1 billion) derived from civil construction, toll road concessions, telecommunications, ports and property development. MRN's diamond mining experience includes treating in excess of 2.0 million cubic metres of alluvial gravels each year at their Rio Novo dredging operation in Minas Gerais State, producing approximately 25,000 carats per annum. The Rio Novo mine has operated for more than 15 years and now has an estimated mine life of approximately 24 months. Under the agreement, which follows two years of technical and commercial evaluation on Brazilian Diamonds' Santo Antonio properties, COMIG will invest approximately Cdn$800,000 over the next 24 months to complete a definitive feasibility study ahead of a formal decision to move to commercial mining operations. In compensation for its investment in this feasibility work, COMIG will be entitled to a 3.5% over-riding royalty from any future alluvial mining operations undertaken by the joint venture partners. Work on the definitive feasibility study will involve the parties to the agreement, undertaking an additional 3,000 metres of large diameter Banka drilling and bulk sampling of up to 6 new test pits to confirm diamondiferous gravel grades and physical and operating characteristics of the deposit. Following successful completion of the bulk sampling and evaluation programme, a new joint venture company will be established in which MRN will hold a 75% interest and BDY a 25% interest. BDY will transfer to the new company, its rights to mine diamonds contained in alluvial gravels along the Santo Antonio do Bonito River and MRN will contribute significant quantities of mining equipment including large (2,000 tonne) bucket wheel and suction mining dredges suitable for large-scale alluvial mining operations. MRN will become the operator of the venture and will provide capital funding and generally facilitate the commencement of mining operations on the project license areas. Initial estimates of the mining operation to be evaluated, suggest it may be possible to establish a project with a mine life of more than 14 years producing in excess of 60,000 carats per annum. MRN has estimated that the capital expenditure required to commence mining operations, including the relocation and refurbishment of MRN's large dredges from Rio Novo and the installation of about 40 kms of power lines, will be approximately US$8-10 million. It should also be noted that the estimated replacement value of MRN's large bucket wheel and suction dredges anticipated to be used in the mining operation is in excess of US$40 million. Whilst this venture is to be limited to the mining of alluvially occurring diamonds on the project area, COMIG and MRN will have a first right of refusal to invest in any kimberlite mining operation which Brazilian Diamonds may contemplate for the properties, the terms for which investment remain to be negotiated. Brazilian Diamonds holds approximately 7,000 hectares of licenses along the Santo Antonio do Bonito River and has conducted an extensive examination of the alluvial diamond prospectivity of the project area, identifying approximately 23 million cubic metres of diamond prospective gravels. Historically, garimpeiros operating in the Santo Antonio valley are reported to have recovered many large, gem quality diamonds using crude mining methods. Stones recovered have included the Presidente Vargas, at 727 carats, among the largest gem diamonds ever found and numerous other stones of more than 300 carats. Brazilian Diamonds is evaluating a significant number of kimberlites and other magnetic anomalies within the Santo Antonio Valley to determine whether they could be the source of numerous large diamonds that have been found in the area. This exploration and evaluation program will continue throughout the year under the supervision of consulting geologist, Dr Harrison Cookenboo. Brazilian Diamonds' Chairman, Kenneth P. Judge said: "This agreement represents the culmination of two years of technical and commercial due diligence by our well known and highly respected partners. The substantial commitments being made by our partners reflect the quality of the work done by the highly competent team assembled in Brazil. The company's participation in this joint venture should provide another source of revenue to be generated from our license portfolio of more than 200,000 hectares and we are optimistic that this is only the first of a number of agreements presently under negotiation which will demonstrate the progress we have made in evaluating the diamond prospectivity of the license portfolio that we have accumulated over the last three years. The primary focus of our own activity will continue to be the development of the "Canastra 1" kimberlite pipe and the exploration of kimberlite pipes and geophysical anomalies in the Canastra and Santo Antonio regions where we continue to make important progress."