DIX Moves Forward With Brazilian Aquisition

Diamond Exploration Inc. announce it has entered into a purchase and sale agreement with Armex Mining Corp., a private British Columbia company, to acquire three diamond properties known as the Juina Property, the Rio Pari Property and the Rio Arinos Property, all located in the state of Mato Grosso, Brazil. Under the terms of the agreement, the Company will acquire a 100% interest in all three properties (other than 49% joint venture interest on a portion of the Juina Property owned by a third party), in consideration for the payment of $2,500,000. The Juina Property will be subject to a 2% NSR Royalty in favour of Armex, to a maximum of $3 million, with $150,000 of advance royalty payments due within 115 days of closing. The Company will also be required to make a further payment of $2,000,000 with respect to the Rio Pari Property and $1,750,000 with respect to the Rio Arinos Property after proving a NI 43-101 compliant resource of not less than 500,000 ct of diamonds on each property.

The Juina Property consists of a group of advanced diamond exploration and exploitation concessions totaling approximately 79,000 hectares located near the town of Juina, Mato Grosso, Brazil. The Juina Property includes a number of identified diamondiferous kimberlite pipes as well as a number of prospective alluvial areas. The Rio Pari property comprises approximately 3,600 hectares located in the Municipality of Alto Paraguai, near Cuiaba, Mato Grosso, Brazil and the Rio Arinos Property, located approximately 150 kilometers northwest of the city of Cuiaba, covers 9,800 hectares. Both the Rio Pari and the Rio Arinos Properties are prospective for alluvial diamonds and are not as advanced as the Juina Property.

The Company has also arranged a concurrent non-brokered private placement of 25,600,000 Units at a price of $0.10 per Unit, each unit being comprised of one common share and one five year common share purchase warrant entitling the holder to purchase one additional common share at a price of $0.15 (the “Placement”). Completion of the Placement will not result in the creation of a control person. Proceeds of the Placement will be used to fund the purchase of the foregoing properties and for working capital. All securities issued pursuant to the Placement will be subject to a four month hold period.