Diagem pulls stones from gravels overlying Brazilian kimberlite (February 27, 2006)

Vancouver — Diagem (DGM-V, DGMRF-O) is reviewing the diamond haul from bulk sampling of eluvial gravels overlying the Collier-04 kimberlite pipe on its 214 property in the Juina diamond district of northern Mato Grosso state, Brazil.

The company has calculated the recovery of almost 170 carats of diamonds (extrapolated from unsorted concentrate fractions) in 688 cubic metres of in situ, lateritic gravel extracted from 40 pits overtop of the pipe, giving a preliminary average grade of 0.25 carat per cubic metre. The four largest stones weighed 17.14, 3.16, 2.14 and 1.87 carats.

The sampling program is focused on assessing the viability of mining the underlying Collier-04 kimberlite in addition to the diamondiferous eluvial and colluvial material. The 40 sample pits, conducted in a grid pattern over the pipe, individually returned variable grades of up to 1.16 carats per cubic metre.

Diagem noted that the lateritic nature of the near-surface gravel might mask some diamonds within the upper layers due to coating by iron oxides, possibly impeding detection of the stones. Additional processing can strip the coatings.

The Collier-04 pipe was discovered in the 1990s, when Diagem had partnered with Rio Tinto (RTP-N). The major extensively drilled the kimberlite with over 140 holes, resulting in a resource calculation (prior to National Instrument 43-101) of 13.9 million tonnes grading 0.4 carat per tonne contained in six blocks ranging from surface to 95 metres deep.

The pipe is an irregular ovoid shape with about 15-17 hectares of surface expression. Its dimensions, at surface, are about 320 by 550 metres; it narrows to a width of about 120 metres at 90 metres depth, where crater facies kimberlite has been identified. A series of northwest and northeast faults through the pipe show vertical displacements of up to 100 metres.

In its evaluation, RTZ also processed about 560 tonnes of tuffaceous kimberlite breccia through a pilot plant. Significant grade variations were noted in the various facies, ranging from 2.3-67.6 carats per hundred tonnes.

In addition to its 214 project, Diagem also holds a number of other alluvial and primary diamond properties in the Juina area.