| Pure Diamonds and De Beers Canada Inc. |
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Pure Diamonds Exploration Inc. (PUG:TSX) has been involved on an ongoing basis in diamond exploration in Canada since 1993. During this time the Company has successfully participated in the discovery of the Buffalo Hills kimberlite field in Alberta and the discovery of several kimberlites in an area west of the Lac De Gras diamond field and the Coronation Gulf region, all in the Northwest Territories.
In August of 2004 Pure Diamonds entered into an agreement with De Beers Canada Inc. to advance exploration on its Colville Lake Property in the Northwest Territories. The Company has spent over $3 million on the Property and the success of this program as well as the good working relations between the two companies has led to the High Arctic Option Agreement, a tremendous opportunity for the Company to become a major player on this important diamond exploration region.
On May 17, 2006 Pure Diamonds announced that an agreement had been executed with De Beers Canada Inc. to form a Joint Venture Partnership on what is termed 'The High Arctic Portfolio'. The properties within the High Arctic Portfolio include Baffin Island, Eden Point, Muskox Hill, Chartrand Lake, Byron Bay and Mount Pelly (the "Properties") comprising 10.8 million hectares (26.8 million acres). The option agreement requires Pure Diamonds to spend $5 million on exploration of the Properties in each of the years 2006, 2007 and 2008 and issue to De Beers 7.5 million shares upon formal approval of the agreement and a further 5 million shares on each of the first and second anniversaries, if Pure Diamonds elects to continue with the option agreement. De Beers has acquired, under a private placement, 10 million units at $0.06 per unit (pre-consolidation). Each unit consists of a common share and one-half of one common share purchase warrant, exercisable at a price of $0.09 per share for a period of two years. De Beers also completed a further private placement of 1,724 million units at $0.29 (post-consolidation). De Beers will continue to operate the projects on behalf of the parties under the supervision of the Technical Management Committee, and has the right to appoint members to the Board of Pure Diamonds commensurable with De Beers' percentage common shares ownership of Pure Diamonds. If ever a $2.5 billion insitue threshold value is established De Beers has a back-in option to acquire an undivided 70% interest in the Properties with Pure Diamonds having a 30% interest.
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| Company Outlook |
Pure Diamonds and De Beers are pleased to have completed an agreement covering such a broad and diverse portfolio of properties in such a strategic area of diamond potential in northern Canada. This area is also actively being explored by Twin Mining, Patrician Diamonds, Stornoway Diamonds, Diamondex/Kennecott Exploration and BHP Billiton. Pure Diamonds, through this agreement with De Beers, will now be a major participant in the exploration of this region.
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| The High Arctic Portfolio |
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| The Baffin Island Project |
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The Baffin Island Project is the most advanced within the High Arctic Joint Venture and recently has been the focus of exploration for De Beers in the High Arctic. Exploration in 2006, which was a continuation of this program, included airborne magnetic and electromagnetic surveys, prospecting and geological mapping, ground geophysics and diamond drilling. The program focused on the core area of the Baffin Island Project where a kimberlite boulder train, over a length in excess of 50 kilometres with associated prospective mineral chemistry results and recently announced micro-diamond results in the news release dated September 12, 2006, has been discovered and defined in detail over the last two years.
The most significant result to date from the 2006 exploration program was the discovery of a new kimberlite dyke named Aliguja. This discovery was again made as the result of diamond drilling at the head of a well defined boulder train; one of many specific boulder trains that had been defined within the larger boulder train as a result of detailed prospecting and geological mapping. The Aliguja discovery is over two kilometres east of the Amon kimberlite occurrence that was discovered in late 2005 and on trend. It is clear that both of these discoveries are the source of the boulder train that led to their discovery. The mineral chemistry analysis indicates that both of these kimberlites are highly prospective for diamonds. Furthermore the micro diamond analyses from both the Aliguja and Amon boulder trains returned 263 and 234 micro diamonds from 99.3 and 136.2 kilograms respectively, strongly confirming the diamond potential from both of these kimberlite dyke systems.
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The 2007 High Arctic Joint Venture Field program is now well underway. The Baffin Island Project portion of the program consists of diamond drilling of 5 well-defined geophysical targets from the combined magnetic and electromagnetic airborne survey completed in 2006 will be evaluated for kimberlite. Each of the targets has supporting Kimberlite Indicator Mineral anomalies from systematic sampling completed over the last several years. Based on the geophysical anomalies, each of these targets reflects a potential kimberlite pipe. The geophysical targets also occur at or near the northern terminus of the kimberlite boulder train, which to date is over 50 km in length. An example of the geophysical targets is available on the Company's website.
The second target type that will be evaluated by drilling are several locations that have been defined by detailed analysis of both the boulder trains and the Kimberlite Indicator Mineral Sampling. The information from the boulder trains and Indicator Minerals results generated by both the Amon and Aliguja kimberlite has been used to re-evaluate the overall boulder train. This has resulted in the identification of shorter more discreet trains within the overall trains that are similar to the boulder trains from the Amon and Aliguja kimberlite discoveries and are also related to east west structures interpreted from the airborne geophysics. One of these structures is the host of the known Amon/Aliguja kimberlite trend.
Thirdly, the Amon / Aluguja kimberlite trend has been defined by the kimberlite discoveries and numerous boulder trends along a length of at least 4 kilometers. The kimberlite discoveries are both dyke of sill like bodies that are over 2 kilometers apart. Drilling will extend and further define the known Amon and Aliguja discoveries and test the extension of the trend by drilling at the head of selected boulder trains. Once the kimberlite has been defined in more detail, areas will be selected for larger volume sampling for microdiamond/macrodiamond testing.
To date, 1,187, boulders have been found on the Property of which 969.10 kilograms from selected targets have been tested for microdiamond recovery. A total of 2,713 diamonds have been recovered including 67 macrodiamonds. Several of the boulders collected from the boulder trains that serve to define the Amon/Aliguja trend have produced some of the best microdiamond results indicating that the source kimberlite has excellent diamond content and are very prospective (see March 6, 2007 and September 12, 2006 press releases for further details on the microdiamond results).
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During the 2006 exploration program De Beers successfully completed a regional stream sediment sampling program over the Eden Point Property collecting 991 samples. The sample locations were selected based on drainage basin analyses to provide full coverage of the permit area to identify target areas for follow-up exploration.
The Eden Point Project is comprised of 243 Exploration Permits totaling just over 4 million hectares or 10 million acres. The Property covers all of Devon Island not affected by the Ice Cap and portions of Cornwallis and Little Cornwallis Islands. This is one of several Properties that form the High Arctic Joint Venture. To have identified Kimberlite Indicator Minerals at this very early stage of data collection is very significant. It serves to confirm the theory that much better Indicator Mineral Recovery would be achieved with modern processing and laboratory techniques and clearly reflects positively on the potential to discover Diamonds not only on the Eden Point.
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During the summer 2006 De Beers, as operator of the Joint Venture, successfully completed a regional sediment sampling program collecting 991 samples. The sample locations were selected based on drainage basin analyses to provide full coverage of the permit area to identify target areas for follow-up exploration. Positive results from the processing and analysis of these samples have resulted in the identification of two large areas within which Kimberlite Indicator Minerals were recovered. One area is located on Cornwallis Island and the other covers the western portion of Devon Island. Given that the sampling was very wide spaced and regional in nature, the recovery of Indicator Minerals from numerous samples within each area is very significant and indicates the potential for the discovery of new kimberlite provinces within both areas.
Microprobe analyses of the garnet Indicator Minerals recovered from both areas confirms mineral chemistry that reflects the diamond stability field thus increasing the potential for the discovery of diamond bearing kimberlite. Photomicrographs of the garnet indicators with the related mineral chemistry plots are posted on the Company's website together with maps showing the results from the Eden Point and other of the High Arctic Projects.
Planning for the 2007 exploration season is well underway. The primary goal of the 2007 program is to advance the project to the drilling stage as soon as possible. In order to achieve this goal, detailed exploration will focus on Cornwallis Island with some follow-up sampling and prospecting of selected priority areas on Devon Island.
Exploration in 2007 on Cornwallis Island will include detailed low elevation airborne magnetic surveys, air-photo studies to identify possible kimberlite at surface and follow-up sampling to enhance the Kimberlite Indicator results from the 2006 regional program. Drilling of priority targets may be completed pending operating conditions before the end of the 2007 summer exploration season.
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| Muskox Hill- Chartrand Lake Properties |
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The Muskox Hill Property which covers all of Prince of Wales Island was also acquired by De Beers based on historic kimberlite indicator mineral results from stream sediment samples. In 2006 exploration on the Muskox Hill consisted of follow-up detailed stream sediment sampling collecting 727 samples for kimberlite indicator minerals, along with prospecting and geological mapping. Follow up studies of indicator mineral anomalies will be conducted in 2007.
In 2007 a detailed airborne magnetic survey will be completed over a portion of the Chartrand Lake Property to follow up encouraging indicator mineral results. As targets are defined ground truthing will be completed in anticipation of drill testing selected targets for kimberlite.
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Corporate Office:
Pure Diamonds Exploration Inc.
1255 West Pender Street, Vancouver, British Columbia, Canada V6E 2V1
Telephone: (604) 687-2038
Fax: (604) 687-3141
Email: keevil@shaw.ca
Web site: www.pure-diamonds.ca
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Disclaimer:
The information herein may contains forward looking statements based on assumptions and judgments of the management of the Pure Diamonds Exploration Inc. regarding events or results that may prove to be inaccurate as a result of exploration or other risk factors beyond its control. Actual results may differ materially from the expected results. All statements herein, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that Pure Diamonds Exploration Inc. expects are forward-looking statements. Such forward-looking statements are not guarantees of future performance, and are based on numerous assumptions about future conditions that could change. The material contained herein is for information purposes only and is not and is under no circumstances intended to constitute an offer to sell or a solicitation to buy any securities or a recommendation as to the purchase of any securities.
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