Caledonian Pacific Minerals Announces Exploration License Application for Diamonds, New South Wales.

VANCOUVER, British Columbia--(BUSINESS WIRE)--Aug. 27, 1999--

Caledonian Pacific Minerals NL (VSE:CDM.) (AUSTRALIA STOCK EXCHANGE:CDN) announces it has made application for an Exploration License (ELA 1501) in the Bingara Diamond Field 160 km north-northwest of Tamworth in northern New South Wales.

The tenement comprises 100 units for approximately 300 sq km and was lodged for Group 6 (diamond, sapphire and ruby) and Group 1 (metals including gold) commodities.

Area selection was based on the Company's interpretation of the Peel Geophysical Data Package, released recently by the Department of Mineral Resources as part of their Discovery 2000 program to encourage mineral exploration in the state. This data were integrated with the Metmin 99 data package together with published geological information to generate a number of exciting target areas.

The area covers the northern portion of the Bingara Diamond Field, the second largest diamond producer in New South Wales. There are a number of recorded occurrences of alluvial diamonds within the area under application. Some of these occurrences report the presence of gem quality diamonds. These diamond occurrences are spatially associated with discrete magnetic and/or radiometric (potassic) anomalies interpreted to be related to intrusive volcanic neck or diatreme structures. The possibility of eluvial rather than alluvial diamonds proximal to these geophysical anomalies requires careful evaluation. Many of these discrete geophysical targets are located adjacent to regional magnetic lineaments interpreted as deep-seated basement fracture zones.

A number of high priority target areas have been identified including Lady's Gully, O'Brien and O'Keefe. At Lady's Gully gem quality diamonds are reported from shallow pits and scrapings adjacent to a radiometric potassium anomaly. Gem quality diamonds are also reported from O'Brien which is located adjacent to a distinct radio-element anomaly coincident with a regional north trending magnetic lineament. Alluvial diamonds at O'Keefe occur about 1 km downstream from a discrete radio-element anomaly located on another regional magnetic lineament. Several other diamond occurrences and geophysical anomalies have been identified associated with significant regional structures.

Diamonds, historically, have been recovered from alluvial deposits from within a geographically confined area suggesting they are not exotic to the region. The diamonds usually have well developed crystal forms and show evidence of abrasion and fracture indicating they have travelled some distance from their source. However in comparison to diamonds elsewhere in New South Wales, Bingara diamonds show less mechanical wear implying they could be relatively close to their source. The primary source of these diamonds remains to be found. Diamond exploration has traditionally focussed on locating kimberlite pipes or lamproite diatreme source rocks however these models are not applicable to New South Wales diamond fields. Recent research by the Geological Survey of New South Wales has developed a new model for diamond formation that is directly applicable to the Bingara Diamond Field. This model is conceptually focussed on active subduction in which diamondiferous material is captured by rapidly rising alkalic magmas that cut through the subducted slab to form diatremes at surface. Carrier rocks are postulated to be nephelinite, basanite and leucitite. The recovery of diamonds from nephelinitic and alkali basaltic intrusive rocks at several localities in New South Wales provides strong credence for this model.

On behalf of Caledonian Pacific Minerals NL

Terence J. O'Leary, Managing Director

Graeme Rabone, Chief Operating Officer,

(M Aus IMM FAIG Dip App Geol)

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