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Canabrava Diamond Corporation Announces Progress Report
on Corporate Activities
VANCOUVER, BRITISH COLUMBIA--Canabrava Diamond Corporation (CNB-V)
is pleased to provide the following update on its exploration
projects in Canada and Brazil.
Brazil
Canabrava Joint Venture
Management is delighted with the recent signing of a major letter
agreement with SouthernEra Resources Ltd. Under the terms of the
agreement, SouthernEra can earn a 50 percent interest in the
Project by spending a total of US$20 million over 7 years, with a
firm commitment of US$1.5 million in the first 2 years. The
agreement provides SouthernEra with a number of options including
(a) a facility to reduce its initial earn in commitment, (b) the
right to explore and develop the alluvial resources on the
Project, and (c) the ability to ultimately increase its interest
in specific properties to 70 percent (see News Release dated
April 6, 1999 for details).
A comprehensive technical review of the Project was completed by
Canabrava in December, 1998. This process included the
compilation of an extensive geochemical database, as well as a
number of field trips to the Project area and surrounding region
to investigate and sample key target sites and drainages.
Fieldwork included selected sampling of various known
diamondiferous kimberlite/lamproite pipes to establish base-line
geochemical criteria. Several new pipes were discovered during
this program, and some of the best indicator mineral chemistry to
date has been identified. Confirmation of the success of this
initiative has been the attraction of a new partner with the
credentials of SouthernEra to the Project.
A technical team consisting of both SouthernEra and Canabrava
representatives is currently in Brazil designing a work program
and budget for 1999. Several priority areas and targets have been
identified and these, together with addressing a large backlog of
samples in the laboratory, will be the main focus of the program.
The process of interviewing candidates for key positions has
commenced with a view to recommissioning the on-site laboratory
and initiating an aggressive exploration program within the next
month.
Rio do Sono Joint Venture
A new Joint Venture to develop the alluvial diamond resources on
the Rio do Sono Project has been signed with Paramount Ventures
and Finance Inc. Under the terms of the agreement, Paramount will
spend US$1 million to earn a 50 percent interest in the Project.
An experienced alluvial miner, Baines and Company has been hired
as Project Manager, with Canabrava as operator (for further
details see News Release dated March 18,1999).
Significant progress has been made on the Project over the past
month. Numerous target sites within the active river channel have
been identified for sampling, and additional exploration is being
conducted using ground penetrating radar and waterborne
geophysical techniques. Equipment procurement and construction is
75 percent complete, and bulk sampling operations and the initial
recovery of diamonds are scheduled to commence within the next
month. A mining plan will be developed and the operation will be
stepped up to full commercial production as soon as possible.
Macapa/North Bahia Joint Venture
Results from the sampling program completed on the North Bahia
Project last year have been received and evaluated. A full suite
of indicator minerals, including pyrope garnet, chrome diopside,
chromite and picro-ilmenite, were recovered from the Redondao
kimberlite and subjected to microprobe analysis. The geochemical
characteristics of these minerals are not consistent with a high
diamond potential, and consequently, no further work is planned on
this project.
On the basis of a reconnaissance trip to the Macapa Project in
December 1998, it was decided that the Rio do Sono Project offered
a significantly better opportunity to deliver shareholder value
in the near term, and consequently, further work on the Macapa
Project has been temporarily suspended. Paramount is earning a 50
percent interest in the Macapa/North Bahia Joint Venture by
funding the first US$500,000 in exploration expenditure.
Approximately US$100,000 has been spent to date.
Canada
Ontario Joint Venture
The recent signing of an Option/Joint Venture Letter Agreement
with Kennecott Canada Exploration Inc., which incorporates the
Whitefish Lake Project (100 percent CNB) as well as the KAP and
Rocky Island Lake Projects (50 percent CNB, 50 percent Paramount),
has positioned the Company's Ontario diamond properties for early
success. The agreement grants Kennecott the exclusive right to
acquire a 60 percent interest in the Project by spending C$25
million within seven years, or by advancing the Project to a
decision to begin development and construction of a mine,
whichever occurs first. Kennecott has a firm commitment to spend
C$1.5 million within the first 18 months (for further details see
News Release dated March 15, 1999).
A total of 2,140 modern alluvium, lake sediment and glacial till
samples were collected during the 1998 field season (Whitefish
Lake Project - 526 samples, KAP Project - 969 and Rocky Island
Lake Project - 645 samples). The aims of the programs were (a) to
follow-up on previously identified priority areas (Whitefish Lake
Project), (b) to complete first phase indicator mineral sampling
over claims blocks at a density of one sample per square kilometre
(KAP Project), and (c) to undertake regional reconnaissance
sampling over an extensive area in order to identify high
potential areas for more focused exploration (Rocky Island Lake
Project).
All results have been received and evaluated, and the Company is
pleased to report that the above objectives have been achieved and
surpassed. Results are positive beyond expectations. Abundant
high interest indicator minerals have been recovered on all three
Projects, and numerous discrete target areas have been identified
for follow-up. On the Whitefish Lake Project 6 of the 12
priority areas defined in the 1997 program have been confirmed to
show a high potential for locating kimberlite and, on the basis of
indicator mineral distribution and compositions, a further 7 new
priority areas have been identified. Two new kimberlite
occurrences have been discovered on the Whitefish Lake Project.
One is an outcropping dyke, and the second is float material
associated with a well-defined indicator mineral plume. These
discoveries provide conclusive evidence to support a previous
conclusion based on grain morphologies that the majority of
indicator minerals recovered to date have been derived from
proximal source rocks.
In addition to several hundred chromites and kimberlitic picro-
ilmenites, over 250 pyrope garnets were recovered from the KAP and
Rocky Island Lake Projects. Included in these are a suite of
highly subcalcic G10 garnets with compositions similar to some of
the best recovered from Lac de Gras region in the Northwest
Territories. Numerous chromites with highly favourable
compositions have also been identified. The majority of these
grains display morphologies and surface textures consistent with
minimal transportation in the secondary environment. Additional
claims have been staked to secure the best areas, and more land
will be secured following additional work.
Planning with Kennecott for a Phase Number 1 spring exploration
program is well advanced, with a target date of early May for
mobilization. The focus of the program will be to follow-up on
the highest priority areas. Kennecott geophysicists are currently
evaluating the full airborne dataset and, several high potential
anomalies have already been identified. Details of a more
extensive summer program will be finalised once the spring program
is underway.
Significant steps have been taken over the past few months to
address the financial strength of the Company. In December 1998,
the long term debt with Southwestern Gold Corporation was settled
by way of a share for debt swap, and a Private Placement completed
in April, 1999 netted $2.4 million subject to regulatory
approval. With significant working capital and funding on the
major projects secured through partners, Canabrava is well placed
to cover corporate overheads in the medium term in addition to
generating new projects.
The Company is extremely pleased to welcome SouthernEra and
Kennecott as new partners. Both companies are well known for
their aggressive approach to exploration, and they bring extensive
experience and enviable records of success in diamond exploration
to our Projects. In the short term, the Rio do Sono alluvial
project with Paramount will bring cash flow to both companies.
Canabrava Diamond Corporation is actively exploring for diamonds
in Brazil and Canada and looking at other opportunities worldwide.
The Company is 59.6 percent owned by Southwestern Gold
Corporation (SWG-T).
Rory O. Moore, President
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