6th Nov 2006 15:32
Modeled valuations of DO-27 diamond parcel completed - WO Project, NorthwestTerritories, Canada Shares issued and outstanding: 165,954,229 TSX: SDM AIM: SRE TORONTO and LONDON, Nov. 6 /CNW/ - SouthernEra Diamonds Inc. (TSX: SDM;AIM: SRE) announced today that it has been advised by Peregrine Diamonds Ltd.("Peregrine"), operating partner of the WO that they have received thevaluation report by WWW International Diamond Consultants Ltd. ("WWW") on the2005 and 2006 diamond parcels, comprising 508.9 carats from the Main Lobe andNortheast Lobe pyroclastic kimberlite of DO-27, WO Diamond Project, NWT,Canada. The average modeled valuation ranged from US$45 to US$73 per carat usingWWW's September, 2005 diamond price book. The average modeled valuation ranged from US$41 to US$62 per carat usingWWW's September, 2006 diamond price book, reflecting the significant drop incertain rough diamond prices over the last year. Highlights from the WWW comprehensive report include: - Normally with a sample of only 510 carats, the average spot price (primary producer sales price at the day of valuation) assigned to the sample would be in the order of plus 40 to minus 25 percent (90% confidence limits) of the true value of the resource. This highlights the inherent uncertainties of valuing a small parcel of diamonds. Modeled valuation calculations start with a spot price and therefore variations in spot prices will affect the ultimate modeled valuation. - Given the small size of the DO-27 sample, diamond values have more upward potential than downward, and diamond values per size class in the larger sizes could be higher than those used in the model. - Based on analysis of the 2005 and 2006 bulk samples, WWW believes it is highly unlikely that the average price will be lower than US$41 per carat based on current (September, 2006) diamond prices. - WWW is forecasting rough diamond prices to increase by around 20 percent over the next five years. - At 90 percent confidence limits, 7,000 carats would give a modeled average price within 10 percent of the true value and within 15 percent of the true value with 3,000 carats. WWW would recommend that at least 3,000 carats be extracted from DO-27 as with modeling the confidence limits will tighten to within 10 percent. As the incidence of larger, higher value stones will have the most impacton average diamond values from DO-27, at least 3000 carats will be needed fromthe pipe to give an acceptable degree of confidence that those types of stoneshave been recovered in typical proportion. Determining the economic viabilityof a diamond project is complicated. It involves extensive geostatisticalanalysis due to the highly variable nature of diamond distribution inkimberlite pipes and the fact that both diamond grade and average diamondvalue play important roles in determining the viability of any given diamonddeposit. Since no two diamonds are exactly alike, a significant parcel ofdiamonds (3000 to 7000 carats) is needed to gain the confidence levels ondiamond size distribution and average diamond value necessary to make anyrealistic decisions regarding the future development of DO-27. In that regard, Peregrine will soon announce plans for the upcomingwinter 2007 bulk sampling program at DO-27 with specifics on various drillingmethods and equipment that will be employed to attempt to significantlyincrease the total carats recovered. WWW International Diamond Consultants Ltd. have reviewed and approved thecontents of this release. This release has also been reviewed and approved byJennifer Pell, Ph.D., P.Geo., Peregrine's internal Qualified Person ("Q.P."),and Howard Coopersmith, P. Geo., Peregrine's external Q.P. SouthernEra'sWestern Exploration Manager, Mr. Uwe Naeher, Professional Geologist, qualifiedperson, under NI 43-101, has read the contents of this release. SouthernEra holds a 4.9% interest in the WO Diamond Project. SouthernEra Diamonds is one of Canada's fully integrated diamondcompanies with extensive kimberlite diamond exploration and alluvial programsin the DRC as well as other countries including Canada, Gabon, Zimbabwe andSouth Africa. The Company also holds a 57% interest in the KlipspringerDiamond Mine in South Africa and maintains an 18 percent free-carried interestin the Camafuca Diamond Project in Angola. Some statements contained in this news release are forward-looking and,therefore, involve uncertainties or risks that could cause actual results todiffer materially. Such forward-looking statements include comments regardingexploration work. Actual results could differ materially from thoseanticipated. The Company disclaims any obligation to update forward-lookingstatements.For further information: SouthernEra Diamonds Inc.: Howard M. Bird, SeniorVice President, Exploration, or Sharon Allan, Investor Relations, Telephone:(416) 359-9282, Fax: (416) 359-9141, E-mail: inbox(at)southernera.com,www.southernera.com; London: 4C-Burvale, Carina Corbett, Director, Telephone:++44 (0) 207-907-4761, Fax: ++44 (0) 207-907-4769, Email:Corbett(at)4c-burvale.co.uk(SDM.) ENDSOUTHERNERA DIAMONDS INCRelated Shares:
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