Diagem provides update on the Collier-04 diamond project

Diagem Inc. reports that 412 diamonds weighing more than 1 carat for a total carat weight of 879 carats have been recovered from March to December 31st, 2007 at the Company’s Collier-04 development project in the State of Mato Grosso, Brazil. These larger diamonds represent 7.4% of the total carat weight of all diamonds larger than 1.7 mm.

Since March, 2007, a total of 98,085 diamonds weighing 11,825 carats have been recovered from the processing of 31,692 cubic metres of in-situ material at Collier-04 (Table 2 below). This represents an average diamond grade of 0.37 carats per cubic metre and an average carat weight of 0.12 carats per diamond for diamonds coarser then 1.7 mm.

Denis Francoeur, CEO of Diagem Inc., stated: “The development of the Collier-04 kimberlite project is conceived as a multistage project designed to process the weathered portion of the kimberlite pipe in its initial stages where little or no stripping is required. We are encouraged with the progress made in 2007. The marketing of the diamonds recovered will be an important component of the feasibility of the project. Positive conclusions will lead to the optimisation of the extraction and recovery processes and to the evaluation of the kimberlite at depth which has been historically documented by more than 100 drill holes”.

In October, a second work shift was added to the pilot concentration plant which doubled the material processed. In November and December, the plant was idled for maintenance and the implementation of minor modifications to improve its performance. Activities at the plant resumed on January 7th, 2008 following shut down of the plant on December 15th, 2007. The Company is also completing upgrades at its X-Ray Separator facility in Juina, where the Collier-04 concentrate is processed for diamond recovery.

The Company activated its Collier-04 diamond reporting with the Cadastro Nacional do Comercio de Diamantes (”CNCD”) in Brazil, which is part of the revised protocol for the certification of the Kimberley Process. The Collier-04 diamonds are being shipped to Antwerp for appraisal and marketing.

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