Drilling Report

Drilling commences on the DO-27 kimberlite, Northwest Territories,

    Canada

 

    Shares issued and outstanding: 128,313,101           

    TSX: SDM

    AIM: SRE

 

    TORONTO, ON and LONDON, UK, Jan. 18 /CNW/ - SouthernEra Diamonds Inc.

(TSX: SDM; AIM: SRE) has received the following report from Peregrine Diamonds

Ltd, operating partner of the WO Project Joint Venture, with regards to the

current and upcoming 2006 programs.

 

    DO-27 Kimberlite

    ----------------

 

    Core drilling has commenced at the DO-27 kimberlite pipe. The DO-27 pipe

is part of the WO Diamond Project and is located 23 kilometres south-east of

the Diavik(TM) diamond mine, N.W.T., Canada. The first of two core drill rigs,

operated by Connors Drilling, began drilling on January 12th, 2006 with the

objective of collecting geological and geotechnical information in advance of

large diameter, bulk sample drilling, which is scheduled to commence late

January/early February, 2006.

    The WO Diamond Project comprises a total of 15,107 hectares and currently

contains nine known kimberlite pipes, the largest of which is DO-27 which

covers an area in excess of 9 hectares. A 151 tonne, mini-bulk sampling

program conducted by Peregrine at DO-27 during 2005, revealed an average grade

of 0.98 carats per tonne from five of six holes drilled (sample PDL-1). A

sixth hole returned an average grade of 0.70 carats per tonne (sample PDL-2).

    As reported on August 29th, 2005 by Peregrine, these grades compare

favorably with published data for kimberlite pipes at BHP Billiton's Ekati(TM)

Diamond Mine. The Annual Information Form of Dia Met Minerals, dated June 14,

2000, reported, as part of the feasibility study, an average grade for five of

the Ekati(TM) pipes of 1.09 carats per tonne. The average value was reported

as US$84 per carat.

    Three independent valuations on the diamonds collected from the 2005 

mini-bulk sample returned values of US$59 to $78 per carat for sample PDL-1.

The average values combining both PDL-1 and PDL-2 ranged from US$53 to $67 per

carat with the highest value diamond being a 1.85 carat, clean, white

octahedron, valued at US$1,591 to $2,063. The valuations were actual primary

producer sales values on the day of the valuation, not modelled valuations. As

bulk sample sizes increase, there may be a correlation with higher average

diamond values as a proportionally larger population of larger, higher value

diamonds may be recovered. Modelling of the diamond size distribution and

diamond values attempts to predict average diamond value in a larger sample.

    The bulk sample that Peregrine will collect this winter will be extracted

from DO-27 using two, 24" diameter, reverse circulation (RC) drill rigs

operated by Encore Drilling of Edmonton. The sample will be processed at BHP

Billiton's Ekati(TM) Diamond Mine Test Plant starting the second quarter of

2006.

 

    DO-18 Kimberlite

    ----------------

 

    In addition to the bulk sampling program which has commenced on DO-27,

Peregrine is awaiting micro-diamond results from seven core holes drilled

during the summer of 2005 on the nearby DO-18 kimberlite. DO-18 is in excess

of 3 hectares in size, and located approximately 700 metres north of DO-27.

Previous drilling at DO-18 returned encouraging micro-diamond results as high

as 1.41 carats per tonne over 242 metres. The micro-diamond analyses from the

holes drilled in 2005 are being performed by Saskatchewan Research Council 

Geo-analytical Laboratories in Saskatoon, and results are expected in

February, 2006. In the event that results are encouraging, a mini-bulk

sampling program will be conducted at DO-18 during the summer of 2006.

    Previous drilling and the results of a Falcon(TM) Gravity Survey

previously flown by BHP Billiton in 2001 over DO-27 and DO-18 suggest that a

third pipe may be located between the DO-18 and DO-27 kimberlites. Further

core drilling is planned this year in the area between the DO-27 and DO-18

kimberlites to test this hypothesis. Drilling is also planned on a number of

other high-priority targets within the WO Diamond Project area that have

coincident geophysical and geochemical anomalies.

    Dr. Jennifer Pell, P.Geo., of Peregrine Diamonds is the Qualified Person

who is responsible for the WO Joint Venture program.

    SouthernEra holds a 4.9% interest in the WO Diamond Project.

 

    SouthernEra Diamonds is one of Canada's largest fully integrated diamond

companies with extensive diamond exploration in five countries including

Canada, Gabon, the DRC, Zimbabwe and South Africa. This represents one of the

most active global diamond exploration programs after the majors DeBeers, BHPB

and Rio Tinto. The Company also operates the Klipspringer Diamond Mine in

South Africa and maintains an 18 percent free-carried interest in 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 to

differ materially. Such forward-looking statements include comments regarding

exploration work. Actual results could differ materially from those

anticipated. The Company disclaims any obligation to update forward-looking

statements.

 

    For further information: SouthernEra Diamonds Inc., Howard Bird, Senior

Vice President Exploration, or Sharon Allan, Investor Relations, Telephone:

[phone], Fax: [phone], 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)4cburvale.co.uk

    (SDM. SRE)