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| | Tue May 1, 2007
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Without question, the exploration and mining industry is in the middle of a boom. Many commodities are experiencing record high prices, and increased demand fueled by economic expansion in China and India continue to drive the prices higher. The increasing divergence between supply and demand in many markets has put greater focus on new discoveries. The diamond industry is definitely no exception. However, there has not been a major diamond discovery globally for over a decade, which adds to the increased demand for rough diamonds in the future. Presently, Canada is the fourth largest diamond producer by value, and is expected to move back into third place once the Snap Lake diamond mine in the Northwest Territories comes into production later this year. Diamondex's goal is to discover Canada's next diamond mine, and the Company possesses all the essential elements to achieve this goal - large and highly prospective land holdings, a skilled and dedicated technical team with more than 200 years of diamond exploration experience and a significant history of success, with strong support from the investment and financial community
The Year 2006 in Review
Diamondex had an active year in 2006. As one of Canada's leading diamond exploration companies, the Company continued to focus its exploration efforts in the Northwest Territories and Nunavut, and has expanded the property portfolio to include highly diamond prospective areas of Alberta and Saskatchewan.
In 2006, Diamondex focused on advancing a few key projects, while maintaining its land positions in areas that exhibit known diamond potential. During the fiscal year, we expended $8.6 million on exploration programs, enabling us to advance these key projects to the drill-ready stage. Our exploration budgets reflect our confidence in the economic potential of our projects. At the close of 2006, Diamondex had a portfolio of 20 projects with total land holdings of approximately 7.75 million acres in five regions of Canada recognized for their diamond potential.
Diamondex raised over C$16.5 million in a bought deal financing in May 2006. This put the Company into a strong financial position to enable it to advance key projects through aggressive exploration activities.
Lena West, the largest property in Diamondex's portfolio, now encompasses 3.35 million acres located in the lower Mackenzie River area of the Northwest Territories. Lena West is considered to host significant diamond potential, as the project area overlies a region that is believed to host several kimberlite clusters. Fourteen diamonds have been recovered since exploration commenced on the Lena West project. The largest of these diamonds measures 3.0mm in its longest dimension. Several of the diamonds were located within a single district where highly anomalous concentrations of fresh kimberlitic indicator minerals occur. At least seven high priority regions within the project area have been identified from the Company's exploration initiatives to date. Future exploration activities at Lena West will focus on these highly prospective areas with further detailed heavy mineral concentrate sampling, airborne geophysics and diamond drilling.
Diamondex's Brodeur project, centred on the northern part of Baffin Island, is proving to be a significant acquisition. Brodeur is the most advanced stage project in Diamondex's portfolio, hosting three known diamond-bearing kimberlite bodies - Tuwawi, Nanuk and Kuuriaq. Tuwawi, the largest of these kimberlitic bodies, has an approximate surface expression of four hectares, while Kuuriaq, which is a steeply dipping, sheet-like body has a potential strike length of 5.5 kilometres, with observed widths of 1.2 to 2.2 metres in some areas. This past year also brought the discovery of a new kimberlite, named "Katigia". This dyke-like structure has been defined in outcrop for 15 metres, with an apparent thickness ranging from 1.5 metres to 3.5 metres. Upcoming exploration programs will include drill-testing on the Tuwawi kimberlite pipe as well as a mini-bulk sample to be collected from Tuwawi in an effort to determine potential diamond grades and quality.
During the third quarter of 2005 and late 2006, Diamondex acquired three significant diamond properties in Alberta and Saskatchewan, in close proximity to the Buffalo Head Hills and Fort a la Corne kimberlite fields respectively. The Pegasus project acquisition was prompted by the recognition of the high diamond potential of the area, based on recoveries of G9 and G10 pyrope garnets, a "good" Archean basement, and the fact that the area has never been systematically evaluated. The Summit Lake and Warman projects in Saskatchewan host large magnetic and gravity anomalies that, given their occurrence in a environment geologically similar to the Fort a la Corne kimberlite field, could be indicative of kimberlite intrusions.
Diamondex conducted relatively little exploration on its projects in the Slave province of the Northwest Territories and Nunavut during 2006, but maintained its land holdings in this highly prospective region.
In closing, on behalf of the Board of Directors, I would like to thank all of our employees, contractors and partners for their significant contributions to Diamondex's accomplishments. And finally, thank you to our shareholders for their support and confidence in our exploration endeavours. |
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