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DIAMOND FIELDS TO COMPLETE ACQUISITION OF SOUTH AFRICAN DIAMOND MINES -- LOXTON DAL AND FRANK SMITH

 VANCOUVER, Jan. 12 /PRNewswire/ -- Jean-Raymond Boulle, chairman of the board of Diamond Fields, is pleased to announce that after an extensive technical review by the Canadian engineering firm of Watts, Griffis and McOuat, ("WGM") the company has satisfactorily completed its due diligence and is proceeding with the acquisition of a 66.67 percent controlling interest in two producing kimberlite diamond mines, the Loxton Dal and the Frank Smith. Both mines are located in the famous Kimberley District, the heart of South Africa's historical diamond fields and home to such famous De Beers' mines as the Finsch, Wesselton, Bultfontein, De Beers, Dutoitspan and Koffiefontein (see map).
 The purchase consideration for the two mines is 566,666 shares of Diamond Fields stock, $625,000 U.S.($150,000 deposit and $475,000 in sellers expenses) and 8.2 million Rand (at the current Financial Rand rate this equates to $1.85 million U.S.). The company's Cape Town attorneys, Fairbridge, Arderne and Lawton, have advised Diamond Fields that in their opinion the company should qualify for the Financial Rand which is designed to give foreign investors a preferential Rand rate to the U.S. dollar (currently 4.3-to-1 as opposed to 3.3-to-1 exchange on Commercial Rand).
 The Loxton Dal mine is located 25 kilometers northeast of Kimberley and consists of a kimberlite ore body which trends northeast southwest. The Loxton Dal kimberlite consists of three distinguishable pipes classified as the East, Central and West pipes. The Central and West pipes, which account for 60 percent of the ore body, have the highest grade of 100 carats per 100 tons.
 The Frank Smith mine is located 80 kilometers northwest of Kimberley. The surface exposure of the kimberlite pipe is the largest in South Africa not controlled by De Beers. This kimberlite has had diversified and fractured ownership from the turn of the century until the Versluis Family bought out the many owners and consolidated 100 percent of the ore reserves in 1989, this after many years of perseverance. Diamond Fields and its partner is acquiring 100 percent of the Versluis interest.
 Of all the known gem rich kimberlites the Frank Smith has always been favorably compared with the famed De Beers' Koffiefontein mine in producing the highest quality gem diamonds in southern Africa. The Loxton Dal's profits stem from high yields of medium quality diamonds while the Frank Smith's lower yields provide larger stones of outstanding quality and marketability.
 Both the Loxton Dal and Frank Smith mines have excellent infrastructure. Tarmac roads lead to the properties, water is piped from the Vaal River and high voltage electricity is supplied by the Evkom Substation near Kimberley. Both kimberlites are currently being mined by the chamber method to a depth of 150 meters, although large reserves remain above this level.
 The exploration potential to expand the reserves is considered to be excellent. In addition the large accumulation of tailings at the Loxton Dal has been proven to yield as much as 20 cts./100 tons.
 Diamond Fields has assembled a first class management team for the project including a number of senior former De Beers mining engineers based in Kimberley. The company intends to consolidate the current operations of both mines and to expand production at Loxton Dal from 48,000 to 144,000 tons per year and Frank Smith from 156,000 to 360,000 tons per year, all of which is expected to increase the total carat production for both mines from 26,500 carats per year to approximately 100,000 carats per year.
 Proven, probable and possible reserves as given in the WGM Report indicates that a mining life of 20 years for both ore bodies is likely.
 The cost to re-equip and modernize the mines is estimated by WGM to be approximately 17 million Rand ($4 Million U.S.). DFR has agreed to advance up to this amount with repayment to come from 100 percent of the profits before the 33.3 percent partner receives its share.
 The company's acquisition of the Frank Smith and Loxton Dal will allow it to become the first Canadian company to acquire South African mining industry assets since the approval of the new South African Constitution and the recent U.S. and Canadian removal of economic sanctions.
 The company believes these mines are an excellent investment considering the infrastructure replacement cost, the large reserves, the exploration potential and the quality of the diamonds.
 The acquisitions of the Loxton Dal and Frank Smith mines form part of the company's strategy of expanding diamond reserves in Southern Africa. These mines compliment DFR's diverse portfolio of important diamond properties world wide including the unique Luderitz, Namibia sea diamond property (660 square kilometers with access from the shore line and 36,000 carats of 95 percent gem quality diamonds produced) and its huge potential reserves.
 Diamond Fields has assured itself of long term cash flow and is poised to dramatically benefit from the increased world wide demand and higher prices for top quality diamonds.
 -0- 1/12/94
 /NOTE TO EDITORS: A copy of the Diamond Fields Resources Inc. map of the Frank Smith and Loxton Mines is available by fax by calling Canada NewsWire Vancouver at 604-669-7764/
 /CONTACT: Jean-Raymond Boulee, chairman, 604-688-7166/
 (DFR.)


CO: Diamond Fields Resources Inc. ST: British Columbia IN: MNG SU: TNM

JB -- LA036 -- 1494 01/12/94 15:36 EST
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Publication:PR Newswire
Date:Jan 12, 1994
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