Sirius Real Estate Regulatory News (SRE)

30 Aug 2005 06:00

Preliminary valuations of DO-27 diamonds in Canada 's NWT average US$59 - $78 per carat Shares Issued and Outstanding: 112,279,101 TSX: SDM AIM: SRE TORONTO and LONDON, UK, Aug. 29 /CNW/ - SouthernEra Diamonds Inc. (the"Company") (TSX: SDM, AIM: SRE) has received an encouraging report from theoperating partner of the DO-27 Joint Venture, Peregrine Diamonds Ltd., withregards to the results of preliminary valuations of the diamonds obtained fromthe 2005 mini-bulk sample of the southern lobe of DO-27. During the periodFebruary - April 2005, Peregrine collected a total of 151.27 dry tonnes ofkimberlite from the southern lobe of the DO-27 pipe. The entire DO-27 complexhas a surface expression of approximately sixteen hectares and is located 23kilometers southeast of the Diavik(TM) Diamond Mine in Canada's NWT. The diamonds from the mini-bulk sample were divided into two packages,PDL-1 and PDL-2, according to the different kimberlite geology noted in thedrilling. Diamond parcel PDL-1, comprising approximately 103 carats, came fromthe pyrope and chrome diopside-rich kimberlite facies intersected in holes RC-1, 2, 4, 5 & 6, all of which averaged 0.98 carats/tonne. Parcel PDL-2,comprising approximately 29 carats, came from the olivine-rich facies ofkimberlite intersected in hole RC-3, which returned a grade of 0.70carats/tonne. Three separate valuations were performed by BHP Billiton Diamonds Ltd.,Rio Tinto Diamonds and Aber Diamond Corp., and were based on fair marketvalues in US dollars at the producer level, sometimes referred to as the"Primary Market". This is the market value the seller would have expected toreceive for these goods if offered for sale on the date of the final viewing,and also assuming a reasonable margin for the buyer either for manufacturingor dealing on the secondary market. No size or value modelling was performeddue to the small sample size. The diamonds from each sample were sized to industry standard DTC sieve,grainer and carat size classes. The diamonds in each size class were sortedand valued based on each valuators current price book. As can be expected,there was a range in values with the larger sample, PDL-1, returning averagevalues of, US$77.77 US$67.02 and US$58.54 per carat. PDL-2 returned averagevalues of US$35.36, US$34.31 and US$32.34 per carat although the very smallsample size of PDL-2 (29 carats) means that a low degree of confidence must beattributed to the values from PDL-2. The average values for the total sample(combining PDL-1 and PDL-2) were US$67.20, US$59.95 and US$53.21 per carat.The highest value stone was a 1.85 carat stone, which was valued at betweenUS$1,591 and US$2,063. Due to the small size of the parcel of diamonds evaluated, thesevaluations must be considered to be preliminary. The valuators have indicatedthat "the size of the sample does not allow for an appropriate model of eitherthe size distribution or quality profile" of the diamonds and that "the sampleparcel presented contained a range of qualities, colours, shapes and sizes asexpected in exploration samples". The valuators also indicated that a largersample to better determine the value per carat and overall quality profile ofthe project is necessary. The results from PDL-1 are substantially higher than the previousvaluations reported by Kennecott Canada Inc. ("Kennecott"), of US$21.70 percarat, reported in November 1994, for the 1079 carats collected frompyroclastic kimberlite from the north-east lobe of the DO-27 pipe, a zone nowknown to have very complex geology that differs from the larger southern lobeof DO-27. One valuator also noted that "the Peregrine samples contain lessgrey piqued and dark brown stones than the Kennecott sample". The averagegrade of Kennecott's underground bulk sample from the north-east lobe of DO-27was 0.36 carats per tonne compared with the grade of 0.98 carats per tonnefrom the southern lobe of DO-27, as reported by Peregrine on June 14, 2005. The values also compare favourably with published data for kimberlitepipes at BHP Billiton's Ekati(TM) Diamond Mine. The Annual Information Form ofDia Met Minerals, dated June 14, 2000, reported, as part of the feasibilitystudy, an average grade for five of the Ekati(TM) pipes (Fox, Sable, Panda -underground and open pit, Misery and Koala - underground and open pit) of1.09 carats per tonne. The average value was US$84 per carat. The Joint Venture is currently engaged in a program of core drilling theDO-27 pipe and the DO-18 pipe located 700 meters north of DO-27. The coredrilling is necessary for geologic and geotechnical information, microdiamondanalysis, and as pilot holes to the large diameter RC drilling planned fornext winter. All information is being used in a scoping/pre-feasibility studybeing prepared by SRK Consultants in Vancouver. Results are currently pendingon microdiamond values from these holes and three previous core holes drilledduring April - May, 2005, one of which reached a maximum depth of 465m belowsurface and ended in kimberlite. Results on the first three core holes areexpected during October, 2005. The Joint Venture is also in the process of planning the next round oflarge diameter RC drilling, scheduled to start during January, 2006, which isdesigned to take a substantially larger sample than that collected during the2005 program. Details of both the core and large diameter RC drilling programswill be announced in September, 2005. The DO-27 Joint Venture comprises SouthernEra Diamonds Inc. (4.9%),Peregrine Diamonds (54.475%), Archon Minerals Ltd. (13.275%), Aber DiamondCorp. (7.35%), DHK Diamonds Inc. (20%). SouthernEra Diamonds is one of Canada's largest fully integrated diamondcompanies with extensive diamond exploration in six countries, includingCanada, Gabon, the Democratic Republic of the Congo, South Africa, Zimbabweand Australia. This represents one of the most active global diamondexploration programs. The Company also operates the Klipspringer Diamond Minein South Africa which is currently under care and maintenance, and maintainsan 18 percent free-carried interest in the Camafuca Diamond Project in Angola. For further information: PLEASE CONTACT: SouthernEra Diamonds Inc.,Mr. Howard M. Bird, Senior Vice President, Global Exploration orMs. Sharon Allan, Investor Relations, Telephone: (416) 359-9282, Fax:(416) 359-9141, E-mail: inbox(at)southernera.com, www.southernera.com (SRE) ENDSOUTHERNERA DIAMONDS INC