Canabrava Diamond: Progress Report on Company Activities; Two Drilling Campaigns Planned.

Business Editors

VANCOUVER, B.C.--(BUSINESS WIRE)--Oct. 22, 2001

Canabrava Diamond Corporation (CDNX:CNB.) is pleased to provide the following progress report on its diamond exploration projects in Ontario.

Ontario Joint Venture with Paramount and Kennecott

As reported in the joint press release of July 25, 2001, the Option Agreement with Kennecott on the Ontario Joint Venture has been amended and Canabrava is now the Project Operator. Paramount Ventures and Finance Inc. has notified Canabrava that it has elected not to contribute to the approved work program and budget for the current program, and as a consequence, its interest in the Project has been diluted. Equity interests in the Project now stand at Canabrava - 75% and Paramount - 25%. Kennecott has the right to earn a 60% interest in the Project by spending $25 million before June 2006 or by making a production decision, whichever occurs first.

The summer field program that commenced on July 1 will continue until winter conditions make prospecting, mapping and sampling operations impractical. Numerous high-interest kimberlitic boulders have been located and mapped as part of this program. Some boulders are large in size (up to 2 x 2.5 metres) and angular in form, and two of the boulders discovered to date contain diamonds (see Press Release of April 17, 2001). The boulder trains correlate with a series of kimberlite indicator mineral plumes previously discovered by Canabrava and refined by Kennecott over the past two years. The presence of highly sub-calcic G10 garnets and favorable chromite and chrome diopside compositions within these plumes provides compelling evidence for the presence of diamondiferous kimberlite in the project area. Representative samples of high-interest boulders are currently undergoing petrographic analysis. Field mapping of the outcrop discovered at the head of one boulder train (see Press Release of August 21, 2001) revealed it to be dyke-like in nature. No microdiamonds were recovered from a 132-kilogram sample taken from this outcrop. The primary source of the diamond-bearing kimberlite boulders remains to be located and the search is ongoing. An option agreement has recently been completed with a third party claim holder within an area currently undergoing intensive exploration (see Press Release of September 19, 2001).

As part of the current program, sample sites that have yielded the best kimberlitic indicator minerals have been revisited in order to carefully examine the glacial history in these areas, a detailed understanding of which is required in order to interpret results accurately. In some cases, additional sampling has been completed in these areas in order to define up-ice termination of diamond indicator mineral plumes. All samples have been sent to Kennecott's laboratory in Thunder Bay for processing and results are expected during the fourth quarter.

A 5,366 line-kilometre airborne geophysical survey was successfully completed in September and ground follow-up investigation of a number of promising anomalies identified from an initial evaluation of results is now underway. In addition, a geophysical consultant is completing final processing and a detailed interpretation of the survey data. The location of the initial airborne survey block was based on the mapped locations of boulder trains and kimberlitic indicator mineral plumes. An additional airborne geophysical survey will be completed during the fourth quarter of 2001, followed by drilling in January and February of 2002 when ice conditions are suitable for testing lake targets.

Groundhog Project with Paramount

The "Groundhog Project" has emerged following the July 1 2001 amendment to the Kennecott Option Agreement. The Groundhog Project comprises the area located between the new and old areas of interest on the Kennecott Option Agreement, and includes most of the areas covered by the former KAP Project and parts of the former Rocky Island Lake Project area. Canabrava is the operator of the Groundhog Project.

At the outset of the current program, ownership in the Groundhog Project was shared 50:50 between Canabrava and Paramount. However, Paramount has notified Canabrava of its election not to contribute to the approved work program and budget for 2001, and as a consequence Paramount's interest in the Project will be reduced according to a straight-line dilution formula. Canabrava intends to fund the full $400,000 program which will result in an approximately 10% dilution in Paramount's interest by December 31, 2001. On any discovery made on the Project prior to June 30, 2003, Kennecott retains the right to a 1.5% Gross Overriding Royalty, capped at $10 million.

An aggressive field program was initiated on the Groundhog Project on July 1st. The focus of the program was to follow-up on a number of discrete kimberlite indicator mineral anomalies located within an area of four townships (approximately 600 square kilometers). Some of the best garnets recovered by Canabrava in Ontario to date are from this target area. Kennecott carried out only limited fieldwork in these areas.

A consulting geologist with extensive experience in exploration for kimberlites in glaciated terrains designed and implemented a till sampling program using three teams of samplers over the summer months. Over 200 till samples were collected along a number of east west lines positioned up-ice from previously identified anomalies. These samples are currently being processed for indicator minerals at an independent commercial laboratory and results are expected by mid-November. In addition, prospecting teams recovered a variety of high-interest boulders which are currently undergoing petrographic analysis.

A 10,952 line-kilometre airborne geophysical survey has also recently been completed. The survey block was defined on the basis of the indicator mineral anomalies with due consideration for the glacial and fluvial transport directions and the structural geology evident in the basement rocks. In addition to the Project survey, the Ontario Ministry of Northern Development and Mines has recently published the results of a large 105,848 line-kilometre geophysical survey that was flown under the government funded "Operation Treasure Hunt" initiative. Large areas of the Groundhog Project were covered by this survey, and a number of high-interest geophysical targets have been identified and staked by Canabrava. In addition, an option agreement has recently been completed with Berland Resources to explore a number of targets identified from the government survey, and discussions are in progress with a number of other parties who hold other ground of interest. Preparations are underway to commence a drilling program in early November. Details of this program will be announced in due course.

Severn Joint Venture with Navigator

On the Kat Project, which is a 50:50 joint venture between Canabrava and Navigator, results from the processing of additional kimberlite from AT-56 have now been received. AT-56 is a diamondiferous kimberlite pipe discovered by the joint venture in northern Ontario in February 2001. In April 2001 the partners reported that a small number of microdiamonds had been recovered from caustic fusion of approximately 261 kilograms of kimberlite from AT-56. A 2.6 tonne sample of kimberlite was subsequently collected from drilling and processed in a commercial plant designed for the recovery of macrodiamonds, defined as those stones not passing through a 1 millimetre square sieve. The processing produced a large concentrate for picking and, as a result, was forwarded to a second commercial laboratory for reduction using caustic fusion. This extra stage of processing, combined with delays at the second lab, resulted in a considerable delay in obtaining final results. No macrodiamonds were recovered from this sample, and no further work is planned for AT-56 at this time.

The Kat Project forms part of the Severn Joint Venture, an agreement between Canabrava and Navigator to explore more than 400,000 square kilometers of the Superior Province in northern Ontario. The partners remain committed to diamond exploration in northern Ontario where important discoveries, including De Beers' diamondiferous Victor kimberlite pipe, continue to be made.

Canabrava Diamond Corporation is actively exploring for diamonds in Brazil and Canada both independently and through major joint ventures with Kennecott Canada Exploration Inc., Navigator Exploration Corp., and Paramount Ventures and Finance Inc. The Company is 45.6% owned by Southwestern Resources Corp.

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.